French dairy giant Danone SA has expressed interest to increase its influence in China's dairy sector through its decision to acquire 25% stake in Chinese infant milk producer Yashili International Holdings Ltd.

Danone SA will be taking part in a private placement deal at HK$3.70 per share, totaling to an estimated US$550 million, Reuters reports.

According to a company filing to the Hong Kong stock exchange on Friday, Yashili's majority shareholder, Mengniu Dairy Co Ltd, will see its stake decreases from 68.05% to 51.04% after the completion of the subscription. Danoneholds a near 10% stake in Mengniu as well.

The tie-up will focus on China's infant milk formula market, which is set to hit $17.8 billion this year, according to Euromonitor.As part of the agreement, Danone will also be recommending suitable candidates to serve as Yashili's new CEO.

The deal is subject to the approval of the company's shareholders, and is expected to be finalized in coming months.