Danone is preparing to sell its stake in a Chinese dairy company to fund stock buybacks as it tries to boost shareholder returns amid pressure from disgruntled investors.
The French company said it plans to sell its stake in China Mengniu Dairy (2319), which has a market value of more than US$2 billion (HK$15.6 billion), later this year.
Most of the proceeds would be used to fund share repurchases.
China Mengniu closed 1.53 percent higher at HK$43.050 yesterday amid a broader market rally in Hong Kong. Shares of the company, which makes milk, ice cream and cheese, have gained 54 percent over the past 12 months.
Danone first took a stake in Mengniu in 2013. Its 9.8 percent holding is currently held indirectly in a venture with Cofco, Mengniu's biggest shareholder, and first Danone will convert the investment into a direct holding.
Mengniu said in a statement it respects Danone's decision and the move won't affect its business strategies and plans.