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UPDATE 2-Danone to sell $1.9 bln Yakult stake in quest to boost shareholder returns

From Reuters - February 14, 2018

PARIS (Reuters) - French foods group Danone (DANO.PA) is to sell a 1.5 billion euros ($1.9 billion) stake in Japanese company Yakult (2267.T) in its latest initiative to boost shareholder returns.

Leading consumer groups including Danone, the worlds largest yogurt maker, as well as Nestle (NESN.S) and Unilever (ULVR.L), have come under pressure from some shareholders who say they should be producing better returns.

Danone, whose brands include Activia and Actimel as well as Evian water, said it would sell 14 percent of Yakult, equating to two-thirds of its holding, as part of a strategy to have a more disciplined approach to how it invests its capital.

Gregoire Laverne, a fund manager at Roche Brune Asset Management which owns Danone shares, said the move was positive.

Danone is sending a strong signal, Laverne said. It is meeting its commitments for a better capital allocation. Now the question is: what will it do with the cash?

Danone said it would comment further on the possible use of the proceeds when the deal is completed in March.

It has held the Yakult stake for more than a decade but there has long been speculation it would look to divest. The sale will be carried out via a market transaction initiated by Yakult and is expected to be settled in March.

Danone has lagged the growth of some rivals, largely due to weakness in its European dairy business in the face of sluggish demand and private-label competition.

POSITIVE DEVELOPMENT

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