Danone, the French dairy, water and biscuits group, has agreed to sell Galbani, its Italian groceries division, to Parmalat, the dairy and foods firm, backed by an unspecified majority investment from Doughty Hanson, the UK-based buy-out firm.

Danone is no stranger to private equity firms as it has sought to streamline its business in recent years. In 1998 it sold Panzalim, its pasta sauce business, to PAI, the private equity arm of BNP Paribas. The following year it sold a majority stake in BSN Embellage to CVC Capital Partners, the pan-European buy-out house.