Italian food group Parmalat said on Tuesday it would spend a maximum of 100 million euros ($89.13 million) if it bought Danone's Galbani unit while a financial partner would take a majority stake in the firm.
In a statement, Parmalat said the Galbani buy was "far from being finalised" and that it still had to complete due diligence. A newspaper had reported the deal could be done in weeks.
"The eventual acquisition would be realised with the participation of a financial partner that would acquire the majority stake of Galbani's share capital," Parmalat said.
"Parmalat would not have any obligation to buy the financial partner's stake at a later stage," it added, saying Parmalat's investment "would not be higher than 100 million euros".
Earlier, la Repubblica paper reported Parmalat was close to agreeing terms for Galbani which it said had been valued at three trillion lire (1.5 billion euros or $1.38 billion). Parmalat said Galbani was worth "well below" that.
La Repubblica added British private equity fund Doughty Hanson was taking part in Parmalat's talks to buy the cheese and ham group.
In Paris, Danone declined to comment. In October, the yoghurt and biscuit maker had said it was in talks with several possible partners over Galbani.
At that stage Parmalat denied reports it was going to pay for Galbani with cash and shares. Tuesday's la Repubblica said a share deal would dilute the stake held by Parmalat's main shareholder, the Tanzi family, to less than half.