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Danone to divest $1.8bn stake in Japan's Yakult

DBR Staff Writer Published 15 February 2018

French food and beverage producer Danone is selling part of its stake in Japanese probiotic drinks brand Yakult Honsha for $1.8bn.

The 14% stake sale, which is part of Danone's capital allocation strategy, in the brand will reduce the company's interest to about 7%.

The divestment will be undertaken through a market transaction initiated by Yakult, which is anticipated to be settled in March.

Yakult also announced a JPY36bn ($338m) share buyback program in which Danone will take part.

Even after the share buyback, Danone expects to remain as the largest shareholder in Yakult and will continue to be on its board of directors.

Danone and Yakult, which started their formal collaboration in 2004, expect to continue working in the future.

The two companies will study the feasibility of collaboration projects in the future, to explore distribution of Yakult’s products in Europe, where the brand does not have a significant presence. Spain is expected to be the first test market.

The companies will also continue with their joint efforts in the promotion of probiotics through the jointly created Global Probiotics Council. They to expand the Ishoku Dogen program that is aimed at deepening the understanding of the link between diet and health.

Danone did not disclose its plans about its intentions of using the proceeds. The company has been facing tough competition in its core business of fresh dairy and yogurt. Danone is said to have suffered from sales slump due to marketing missteps.

Last year, the company acquired soy-milk maker WhiteWave for about $12.5bn, as it intends to diversify its investment into organic foods and drinks.

Image: Pack of Yakult bottles. Photo: Courtesy of Amin/Wikipedia.org.