Danone shares soar on Kraft takeover rumours

22nd June 2006, Comments 0 comments

PARIS, June 22, 2006 (AFP) - Shares in French dairy giant Danone rose sharply here Thursday after the head of Kraft Foods said the US group might be interested in acquiring companies in France.

PARIS, June 22, 2006 (AFP) - Shares in French dairy giant Danone rose sharply here Thursday after the head of Kraft Foods said the US group might be interested in acquiring companies in France.

Analysts said comments by Kraft chief executive Roger Deromedi revived speculation that Danone, in which US soft drink company PepsiCo had been rumored to be interested, might become a takeover target.

Danone shares, after shedding 5.50 percent in the first half of June, were up 3.14 percent at EUR 95.20 in mid-day trading here on an overall market that was 1.02 percent stronger.

In an interview appearing Thursday in the newspaper Le Figaro Deromedi was asked if Kraft, the world's second largest food group, would be interested in investing in France despite a preference by some politicians for keeping French companies French.

"That would not seem to me to be impossible," Deromedi replied, according to Le Figaro.

He said Kraft wanted to expand activities in such sectors as dairy products, beverages and cookies, adding that the group was looking for solid companies that would help it grow internationally.

Danone specializes in fresh dairy products, such as yoghurt, bottled water and cookies. Kraft is known for its Philadelphia cream cheese, Oreo cookies, Ritz crackers and Maxwell House coffee.

Deromedi's remarks described a company "that closely resembles Danone," analysts at Ixis Securities said in a note to clients.

A Danone spokesman contacted by AFP declined to comment on the interview.

The Kraft boss also said his group wanted in particular to focus on opportunties in Russia, India, China, Mexico and Brazil.

"With the exception of Brazil, these countries, along with the United States, are part of a new frontier for Danone, that is, countries that are key for current and future growth," noted analysts at another Paris brokerage.

Deromdei's interview, they added, could therefore "re-launch speculation on Danone."

But at Ixis analysts stressed that an acquisition operation "in the current French climate appears to us to be extremely risky."

In addition, they said, Deromedi himself seemed to minimize such an initiative by stressing that no major acquisition would be possible for Kraft before its spin-off from its parent company, Altria, is completed.

Copyright AFP

Subject: French news

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