French dairy products giant Danone and Japanese dairy company Yakult have entered into an agreement to form a strategic alliance with the aim of strengthening their probiotics businesses and further accelerating the growth of both companies in the functional food and beverage market.

As part of the agreement, which is effective immediately, Danone is to nominate two candidates to Yakult's board of directors while Yakult will nominate one candidate to the board of directors of Danone.

The two companies plan to jointly establish a permanent liaison office, which will identify specific areas of collaboration focusing initially in the area of probiotics outside of Japan. The office will also be responsible for the facilitation of joint projects such as cooperation in research and development, entry into new markets and other business projects that create value for both parties, the two companies said.

Danone and Yakult also plan to create a Global Probiotics Council with the aim of advancing the cause of probiotics with all relevant interest groups such as consumers, regulatory authorities and the scientific community.

Danone already holds a 20% share in Yakult, and has agreed not to increase its shareholding in the Japanese company beyond the current level for five years and not to increase it to such extent that it shall have effective majority control for another five years.