Yakult Falls After Danone Said to Weigh Selling 20% Stake

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Yakult Honsha Co. fell the most in six months in Tokyo trading after France’s Danone was said to consider selling its 20 percent stake in the Japanese dairy-drink producer.

Yakult fell 6.1 percent to 6,290 yen, the most since May 7, after plunging as much as 10 percent earlier today. Paris-based Danone, the world’s largest yogurt maker, has held internal discussions about a possible disposal, people familiar with the matter said, asking not to be named because the details aren’t public. The deliberations are at an early stage and no final decision has been made, they said.

“The news about Danone seems to have triggered today’s selloff” of Yakult shares, said Minoru Matsuno, president of Value Search Asset Management Co., a Tokyo-based investment advisory firm. Recent gains by Yakult had made the stock overvalued, he said.

The market value of Tokyo-based Yakult is about 1.1 trillion yen ($9.4 billion), making the stake worth about $1.9 billion. A sale would end the French company’s 10-year-old agreement with Yakult, whose probiotic and fermented milk drinks are similar to offerings from Danone. It could also raise cash for potential acquisitions by Danone, which is seeking growth after reporting its first annual profit decline in more than a decade last year.

Atsushi Sasaki, a spokesman for Yakult, declined to comment. Representatives for Danone also declined to comment.

Mead Johnson

Danone’s management discussed possible targets including U.S. baby-food maker Mead Johnson Nutrition Co., which is valued at $20.5 billion, at a board meeting last month, a person with knowledge of the matter has said.

Danone fell 0.9 percent to 55.61 euros at the close of trading yesterday in Paris. The shares have gained 6.3 percent this year.

The maker of Activia yogurt and Evian water had previously sought to increase its holding in Yakult, but the Japanese company opposed such a move. Danone hasn’t boosted its shareholding in Yakult, despite a renewal of the pact last year that removed a limit on the size of its stake.

Danone is also discussing a sale of its medical-nutrition business with potential suitors, including Fresenius SE and several buyout firms, people with knowledge of the process said.

(Updates share price in second paragraph.)
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