Danone, France's largest food processing company, on Wednesday announced 486-million-euro (663 million U.S. dollars) investment to raise its stake in China's major milk firm, Mengniu Dairy Co. Ltd.

"Danone announced an agreement, together with COFCO Dairy Investments, to subscribe reserved rights issue by China's leading dairy company Mengniu, raising its interest in this company from 4 percent to 9.9 percent ...," the French company said.

Danone purchases the additional shares for about 5.48 dollars per share, Mengniu said in a statement on Wednesday.

The new investment will make Danone the Chinese company's second-biggest shareholder and "follows on from agreements signed on May 20, 2013 with Mengniu and with COFCO (China National Cereals, Oils and Foodstuffs Corporation), China's largest state-owned food company."

The transaction, subject to the approval of Mengniu's shareholders, was expected to be finalized within the next few months, according to Danone's statement.

Once the deal is completed, COFCO, Danone and Danish dairy group Arla Foods will hold a 16.3 percent, 9.9 percent and 5.3 percent stake in Mengniu respectively, the Chinese milk company said.

The three companies have agreed to combine their shares in a joint venture, COFCO Diary Investment.

In May, Danone acquired a 4 percent stake in Mengniu after establishing the joint venture with COFCO. (1 euro = 1.36 U.S. dollars)