French food giant Groupe Danone SA is in talks with Yakult Honsha Co. to increase its equity stake in the Japanese probiotic drink maker from around 20 percent to near 28 percent, according to sources.
While Danone hopes to strengthen ties between the companies by acquiring additional shares, Yakult is taking a cautious approach due to fears the deal might hamper its management freedom, sources said Saturday.
Danone and Yakult currently operate a joint venture in India and Vietnam to sell Yakult's namesake beverage.
Yakult has already established footholds in about 30 countries and regions around the world, including Taiwan.
Danone is apparently eager to push for a stronger partnership with Yakult in a bid to expand its overseas operations, the sources said.
The two companies began talks on a possible alliance in 2000, but failed to reach an agreement.
After Danone became Yakult's top shareholder in 2003 with a 19 percent stake, the two companies agreed on a partnership the following year with the provision that Danone could not increase its stake in Yakult for a certain period of time.
The restricted time period ends in May and Danone will be allowed to raise its stake in Yakult to a maximum of 36 percent, which prompted the two to begin discussions on whether to strengthen the alliance.
The French company operates in more than 120 countries and posted sales of 19.3 billion euros in 2011.