French dairy major Danone has agreed to invest €437m in Chinese infant formula producer Yashili, in a move to acquire 25% stake.
The investment is said to form a part of the company's strategy to expand its footprint in China.
The acquisition, which is subject to company's shareholder approval, is expected to be completed over the next few months.
Upon completion of the transaction, China Mengniu Dairy, which is Yashili's majority shareholder, will own 51% stake.
Danone and Mengniu will now work together to grow Yashili and develop a wide range of products that meet the highest standards in the infant formula segment.
The transaction also extends the scope of the strategic alliance in fresh dairy products which was first established in 2013 between Mengniu, Danone and COFCO.
Danone CEO Emmanuel Faber said: "Building on our successful cooperation in fresh dairy products, we are today strengthening the winning team formed by Danone and Mengniu by acquiring an equity stake in Yashili -- combining Mengniu's wide-reaching network in China with Danone's international expertise in infant milk products."
Yashili chairman Elaine Sun said: "I am very pleased with this new agreement with Danone, which will facilitate Yashili's expansion in the promising Chinese market for infant milk formula and create new opportunities for the future, offering consumers a wider choice of products that are safe, healthy and of the very highest quality."
Image: Danone factory in Bierun, Poland. Photo: courtesy of incus.