China’s largest dairy producer, Shanghai Bright Dairy and Food Co, has signed an agreement to acquire the Guangzhou city unit of French dairy food group Danone.

No financial details were provided about the deal, which will see Shanghai Bright producing and selling both Shanghai Bright and Danone products in Guangzhou.

Shanghai Bright says the deal will help improve its market share in the southern city as well as providing a platform in order to enter the Hong Kong and Macau markets. This week the company opened its first production plant in Guangzhou. The plant is worth 204m yuan (US$24.6m) and has an annual production capacity of 160,000 metric tons of yoghurt and milk.

Danone holds a 3.85% stake in Shanghai Bright, reported Dow Jones International News.