Danone to return most of Chinese divestment proceeds to shareholders

PARIS (Reuters) - French food group Danone on Thursday said that most of the proceeds from a $2 billion divestment of its stake in China Mengniu Dairy Company will be returned to shareholders through a share buyback programme, it said on Thursday.

Danone, under pressure from investment funds over its shareholder returns, on Wednesday said it would sell its 9.8% stake in Chine Mengniu Dairy.

"The transaction resulted in total gross proceeds of 15.4 billion Hong Kong dollars, representing about 1.6 billion euros ($1.94 billion). The settlement of the transaction will take place on May 17," Danone said.

Shares in the French company, the brands of which include Actimel yoghurt and Evian water, fell 0.6% in early trading, outperforming a 1.8% decline for the CAC 40 index in Paris.

Former Danone boss Emmanuel Faber was ousted as chairman and CEO this year after clashes with some board members over strategy and calls from activist funds for him to resign over the group's lacklustre returns compared with some rivals.

French paper Les Echos this week reported that Antoine de Saint-Affrique was frontrunner to become Danone's new CEO. Danone declined to comment on that report.

($1 = 0.8266 euros)

(Reporting by Benoit Van Overstraeten; Editing by David Goodman)