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HONG KONG Feb 12 (Reuters) - France's Danone has agreed to invest around $665 million to more than double its effective interest in China Mengniu Dairy Co Ltd to 9.9 percent, sending shares in Mengniu surging.
China Mengniu will issue 121.24 million shares, representing 6.2 percent of the enlarged share capital, to a venture between Danone and China's state-owned COFCO at HK$42.5 per share, or 15.3 percent premium to the previous close, it said in a filing to the Hong Kong bourse on early on Wednesday.
COFCO is the largest shareholder of Mengniu, the nation's biggest dairy products maker. China's dairy industry nearly doubled in value to US$40.6 billion in the five years to 2013 and is set to grow in the next five years, Mengniu said in a statement.
French food group Danone, the world's biggest yoghurt maker, owned about 4 percent stake in Mengniu prior to its latest investment.
China Mengniu shares were up 7.7 percent at HK$39.70 by 0148 GMT, while Hang Seng index was up 0.4 percent.
China Mengniu plans to use the proceeds to cut down debt, the statement added.