Chinese food and dairy company Inner Mongolia Yili Industrial announced on ‍Wednesday that it plans to bid for Danone's entire stake in US organic yogurt business Stonyfield for about $850 million.

Danone declined to comment, while Yili said the deal was in its preliminary stages.

Danone had said earlier this year that it would sell Stonyfield, which had 2016 sales of $370 million, as part of an agreement with US authorities to facilitate the completion of its takeover of American organic food company WhiteWave.

This came just weeks after Yili announced it was dropping out of a deal to acquire a 37% stake of China Shengmu Organic Milk, the country's largest producer of hormone-free dairy, because of "anti-monopoly concerns", according to Financial Times. 

Meanwhile, China Mengniu Dairy, the country's second largest dairy firm has also been in a close partnership with Danone in the fields of R&D, the supply chain operation of baby formula and pasteurized milk businesses. 

Sales of high-end organic dairy products are growing rapidly and market competition between dairy products is becoming increasingly fierce as China's middle class consumers are in need of more premium brands. ‍