Board meeting, Chinese asset sale plan lift Danone shares (updated)

China Mengniu Dairy

01/03/2021 09:18

* Board meeting set for Monday - source
    * Danone says preparing sale of stake in China's Mengniu
    * Chairman and CEO Faber under growing shareholder pressure

 (Adds detail)
    PARIS, March 1 (Reuters) - Shares in Danone's  DANO.PA ,
which is expected to hold a board meeting on Monday amid
shareholder pressure to improve governance and boost returns,
rose 2% after it announced plans to sell its stake in Chinese
dairy firm Mengniu.
    Danone will use the gains from the sale to buy back its own
shares, the French food company said in a statement issued late
on Sunday.
    "We see this as a further positive step in tidying up
Danone's non-core portfolio and a signal of serious intent on
the portfolio generally, consistent with recent announcements,"
Jefferies analysts wrote in a note.
    Danone Chairman and CEO Emmanuel Faber, under growing
pressure as shareholders push for changes to improve its
governance, is due to hold a meeting later in the day, a source
familiar with the matter said.
     U.S. investor Artisan Partners joined BlueBell Capital
Partners on Friday in urging Danone to find a new CEO to speed
up efforts to boost returns. They have also called for the role
of CEO and chairman to be split.  urn:newsml:reuters.com:*:nL8N2KW297
    In recent months Faber had intensified actions to ward off
activist investors, announcing in November a plan to cut 2,000
jobs, trim product ranges and sell some assets, including the
group's business in Argentina and the Vega plant-based brand.
    Danone said on Sunday that following a review of its
portfolio it had reached an agreement to convert its indirect
stake in China Mengniu Dairy Company Limited, a company Danone
first invested in in 2013, into a 9.8% direct holding in the
Hong Kong-listed group.
    A sale of the direct stake could follow this year in one or
several transactions depending on market conditions.
    Danone said the indirect stake had a book value of about 850
million euros ($1.03 billion) and contributed 57 million euros
to its income in 2019.
    Faber, in his seventh year as chief executive, has pursued a
strategy centred on diversifying into fast-growing products
featuring probiotics, protein and plant-based ingredients to
mitigate slower growth in dairy.
    

 (Reporting by Dominique Vidalon and Sarah White;
editing by Sudip Kar-Gupta and Jason Neely)
 ((dominique.vidalon@thomsonreuters.com; +33149495432; Reuters
Messaging: dominique.vidalon.reuters.com@reuters.net))