Shares in Danone rose 1.9 on Monday after the French food group said it was taking a first step toward selling its stake in its Chinese dairy partner Mengniu Dairy Company Limited, and would use the gains to buy back its own shares.

We see this as a further positive step in tidying up Danones noncore portfolio and a signal of serious intent on the portfolio generally, consistent with recent announcements, wrote Jefferies analysts in a note.

Danone, whose Chairman and Chief Executive Emmanuel Faber has come under growing pressure as shareholders push for changes at the group to improve its performance, is due to hold a board meeting later in the day, said a source familiar with the matter.

Reporting by Dominique Vidalon and Sarah White; Editing by Sudip KarGupta

Source Reuters