French food group Danone is to invest 486 million euros ($662 million) to raise its stake in leading Chinese milk-product group Mengniu from 4.0 to 9.9 percent, it said in a statement.

The deal, to be concluded in the next few months, would make Danone the second-biggest shareholder in Mengniu, Danone said late on Tuesday.

The increase in the holding would be made by means of a capital increase by Mengniu reserved for Danone.

The decision to increase the holding follows agreements signed in May 2013 with Mengniu and Chinese state-owned company COFCO, Danone said.

Danone, COFCO and Danish milk cooperative Arla are to group their interests in Mengniu to improve boardroom management of the business which is quoted on the Hong Kong stock market.

COFCO owns 16.3 percent of Mengniu and Arla 5.3 percent.

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DANONE