Groupe Danone, one of the world's leading food firms, will increase its stake in Bright Dairy & Food Co to secure an increasing stake in China's milk market, China Daily reported on Friday.

This week, the French company's Asian unit signed agreements with Bright Dairy's two largest share holders, S.I. Food Products Holdings Ltd and Shanghai Milk Group, Bright Dairy said in a statement to the Shanghai Stock Exchange on Thursday.

According to the deals, Danone Asia Pte Ltd will pay 358 million yuan (44.7 million U.S. dollars) for a combined 88.2 million shares from the two firms, to increase Danone's stake in Bright Dairy from the current 9.7 percent to 20.01 percent.

When the share transfers in the latest deal are completed, S.I Food Products Holdings Ltd and Shanghai Milk Group will remain Bright's largest shareholders, each holding a 26.55 percent stake. Danone will remain the third largest shareholder.

Danone is taking advantage of a move by China to allow overseas investors to buy strategic stakes of common stock in its public companies, said the newspaper.

Statistics show that sales of dairy products in China climbed 38 percent to 86.3 billion yuan (10.77 billion U.S. dollars) last year. The market is expected to maintain a relatively high growth rate over the next 10 to 15 years.

Attracted by the fastest growing milk market in the world, many foreign companies are cooperating with local dairy producers.

European dairy producer Arla Foods formed a joint-venture with Mengniu Dairy in August last year. New Zealand-based Fonterra Co-operative Group bought a 43 per cent stake in Shijiazhuang's San Lu Group in December.

A previous report said Danone expected China's contribution to its global revenue to almost double to 15 percent by 2015 because of robust demand for dairy products in the country.

On Monday shares in Bright Dairy were suspended from trading pending approval of its plan to convert its non-tradable shares into common stock. The company announced a plan Thursday about how it would reform its share structure.

Bright Dairy's stock in Shanghai has risen 28 percent this year, outpacing a 16 percent increase in the benchmark Shanghai Composite index. When its stock was last traded on April 7, shares jumped 9.9 percent to 5.64 yuan (70 U.S. cents).

Source: Xinhua