French dairy major Groupe Danone's efforts to exit Britannia Industries [Get Quote] have met with a lukewarm response from the Wadias.

In the latest annual report posted on its website, Danone has said it is negotiating with its partner with a view to selling its 25.5 per cent indirect stake in Britannia.

When contacted, a Danone spokesperson said: "We have no comments to offer at this stage as there is no progress made."

Britannia sources, however, said there is no truth in this.

Danone also said in its annual report for 2007 that as of December 31, 2006, the fair value of its investment in Britannia, based on the price of the company's shares on the Bombay Stock Exchange, amounted to around Rs 770 crore.

Britannia shares have shot up to Rs 1,361.95 a share on the Bombay Stock Exchange as on Thursday as compared to Danone's valuation of approximately Rs 1,090 a share. Sources close to the developments said the increased valuation of Britannia was creating problems between the partners.

The Britannia disinvestment is part of Danone's strategy to get out of its biscuit business worldwide. In November 2007, Groupe Danone had sold its entire biscuit portfolio to Kraft Foods. Its investment in Britannia was not a part of this deal as the Wadias had filed multiple court cases against their partner.

In light of the ongoing negotiations, the dairy major has already reclassified the Britannia shares to "assets held for sale" for a value equal to the estimated selling price.

The relations between the two partners had taken a turn for the worse after the Wadias objected to Danone applying for registration of the Tiger trademark in over 70 countries without informing the Indian company.

Britannia had said it discovered that its trademark was registered in other countries by Danone only when the company began aggressively pushing for its international expansion. Britannia then sued Danone in a Singapore court where the matter is still pending.