Skip to comments.French Government Vows to Resist Rumored Pepsi Bid for Danone [in US, Danon]
Posted on 07/20/2005 4:13:41 PM PDT by aculeus
PARIS (AP) - The French government signaled hostility to a foreign takeover amid rumored plans by PepsiCo Inc. to launch a takeover bid for Groupe Danone SA, sending the food company's shares to a new high.
The stock rose 5.8 percent to close at 92.65 euros ($111.76), the Paris market's biggest gainer for a second straight day, after Prime Minister Dominique de Villepin said Danone was "among the jewels of our industry." The statement fueled speculation about an imminent offer from its U.S. rival.
In New York, PepsiCo shares fell 94 cents, or 1.7 percent, to close at $54.60 Wednesday on the New York Stock Exchange.
"We plan to defend France's interests," Villepin said after a cabinet meeting at his official Matignon residence, although he insisted he was "not commenting on any rumors."
Earlier in the day, however, Labor Minister Jean-Louis Borloo also said the government would do "all we can" to oppose a hostile bid for Paris-based Danone, whose products include Evian water, Danone yogurts and Lu cookies.
Danone and PepsiCo both declined to comment on the prospects for a bid. PepsiCo, UBS and Morgan Stanley also refused to discuss a report in the Financial Times newspaper that the maker of Pepsi-Cola, Fritos chips and Tropicana juices has hired the two investment banks to prepare a possible offer.
The remarks by Villepin and Borloo offered the clearest signal yet that Paris would try to intervene to defend Danone against any attempted foreign takeover.
"I can assure you that we are looking at the subject ... in order to do all we can to try to oppose a hostile offer," Borloo said on Europe-1 radio.
Government spokesman Jean-Francois Cope also said that ministers were "closely watching developments," but stressed that "for the moment, these are rumors and nothing more."
President Jacques Chirac's government has recently suffered humiliating defeats in a May EU constitution referendum and in its failed bid to stage the 2012 Olympics in Paris.
With Chirac's approval ratings at an all-time low and the economy stagnating, analysts say, the government may come under heavy pressure to defend Danone in the same way that it stepped in last year to fend off a bid from Switzerland's Novartis AG for rival drug maker Aventis - which eventually merged with its French rival Sanofi-Synthelabo.
Danone's Wednesday rally extended a 10 percent surge the previous day and left the stock 27 percent higher than at the start of July, when rumors began to circulate of a possible bid by PepsiCo.
Purchase, New York-based PepsiCo on Tuesday repeated its earlier denial of a report that it had already amassed a 3 percent Danone stake, but it refused to answer other questions related to the French company.
The jokes write themselves...
The jokes write themselves...
Forbes.com: Water World
In April 2002, Coke struck a deal with France's Groupe Danone (nyse: DA - news - people ) to license the Dannon and Evian brands for sale in the U.S. The premier brand, Evian, generated a total of $191 million in U.S. revenue in 2002 for both Coke and Danone.
Pump and dump ?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.