French food company Danone Group has agreed to invest 664 million U.S. dollars in Mengniu Dairy Co. Ltd, becoming the second-biggest shareholder of the leading Chinese milk producer.

The deal will increase Danone's stake in Mengniu to 9.9 percent from 4 percent, with the French company purchasing the additional shares for about 5.48 U.S. dollars per share, a Mengniu statement said on Wednesday.

Once the deal is completed, state-owned China National Cereals, Oils and Foodstuffs Corporation (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, said the statement.

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.