Danone, the world’s largest yogurt maker, is considering selling its 20 per cent stake in Japanese dairy-drink producer Yakult Honsha.
According to people familiar with the matter, Danone, based in Paris, has held internal discussions about a possible disposal.
The deliberations are at an early stage and no final decision has been made, they said. Tokyo-based Yakult’s market value is about 1.2 trillion yen ($10 billion), making the stake worth about $2 billion.
Danone shares rose as much as one per cent in Paris, and were trading 0.3 per cent higher yesterday.
A sale would end the French company's 10-year-old agreement with Yakult, whose probiotic and fermented milk drinks are similar to offerings from Danone. It could also raise cash for potential acquisitions, as the company seeks growth after reporting its first annual profit decline in more than a decade last year.
The value of any deal depends on what Danone does with the money, Jeff Stent, an analyst at Exane BNP Paribas, said.
“Coupled with ongoing speculation around the medical business, potentially Danone will be monetising quite a lot of assets,” Stent said. A potential sale of its stake in Yakult “will help fuel speculation that they will get more acquisitive,” he added.
Danone’s management discussed possible targets including US baby-food maker Mead Johnson Nutrition, which is valued at $20.5 billion, at a board meeting last month, a person with knowledge of the matter has said.
The maker of Activia yogurt and Evian water had previously sought to increase its holding in Yakult, but the Japanese company opposed such a move. Danone hasn’t boosted its shareholding in Yakult, despite a renewal of the pact last year that removed a limit on the size of its stake.
Representatives for Danone and Yakult declined to comment.
Bloomberg News, edited by ESM
