Danone Shares Rise After It Prepares To Sell Chinese Dairy Stake
Shares in Danone rose 1.9% on Monday after the French food group said it was taking a first step toward selling its stake in its Chinese dairy partner Mengniu Dairy Company Limited, and would use the gains to buy back its own shares.
"We see this as a further positive step in tidying up Danone's non-core portfolio and a signal of serious intent on the portfolio generally, consistent with recent announcements," wrote Jefferies analysts in a note.
The conversion process remains subject to regulatory approval and once completed, will result in Danone owning a direct 9.8% stake in Mengniu.
'Beyond this transaction, China remains highly strategic for Danone,' the company said in a statement. 'The company has a strong commitment to the country through its several categories, operations and employees.'
Danone, whose chairman and chief executive Emmanuel Faber has come under growing pressure as shareholders push for changes at the group to improve its performance, is due to hold a board meeting later in the day, said a source familiar with the matter.