Danone is in talks to sell its French baked goods business Michel et Augustin to “Ferrero-related” Belgian holding company CTH Invest.

Explaining the rationale behind the possible deal in a statement, Danone said it was keen “to rotate its portfolio more actively”.

Closure of the transaction is dependent on “customary conditions” but is predicted to take place in the “coming months.”

Danone declined to comment on how long the negotiations have so far lasted.

Juergen Esser, deputy CEO and chief financial offer at Danone, said Michel et Augustin was “a much-loved brand” but did not align with the company’s “investment priorities, in the frame of our Renew Danone strategy”.

He added: “This is the best way to create long-term value while giving Michel et Augustin the opportunity to thrive under the leadership of a Ferrero-related company”.

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Established in 2004 by Augustin Paluel-Marmont and Michel de Rovira, the company produces sweet and savoury biscuits, snacks, yogurts and dairy-based beverages.

Danone’s corporate investment arm Manifesto Ventures first backed Michel et Augustin in 2016, acquiring a 40% stake in the French business. In 2019, it increased its stake, with reports at the time suggesting the size of the holding went up to 95%.

In a separate statement, Ferrero said the deal would be the latest made in “premium biscuits”, citing the acquisitions by CTH of the UK’s Burton’s Biscuit Company in 2021, Fox’s in the same market a year earlier, Denmark’s Kelsen Group in 2019 and Belgium’s Delacre in 2017.

This year, Ferrero itself bought a snack-bar production plant in Germany from Laurens Spethmann Holding and Italian frozen-pastry maker Fresystem.

Meanwhile, in the US, Ferrara Candy Company, another company described as “related” to Ferrero, has made two acquisitions this year, buying Jelly Belly Candy Company in October and Brazilian snacks business Dori Alimentos in July.

Danone upped its revenue guidance for 2023 following its third-quarter sales announcement earlier this year, stressing that its Renew turnaround strategy was behind the performance boost.

The company said it expected like-for-like sales growth to hit 6-7% this year, an increase from its former 4-6% estimate.

Its turnaround strategy was launched in 2022, which proposed the potential rotation of 10% of its portfolio.