Home News Chirac promises to defend Danone from takeover

Chirac promises to defend Danone from takeover

Published on July 21, 2005

PARIS, July 21 (AFP) - France hoisted the flag high over dairy group Danone on Thursday to repel foreigners amid intense speculation that US giant PepsiCo was preparing a hostile takeover bid.

President Jacques Chirac, weighed in, warning that he and the government were “particularly vigilant and mobilized”.

“Even more so because today’s priority for France is to defend its industrial competitiveness and the strength of its companies,” he added.

Big guns in the government, notably Interior Minister Nicolas Sarkozy and Finance Minister Thierry Breton, also lent their firepower to the defence of the group, described variously as a national treasure, a vital interest and a symbol of the French way of life.

The price of Danone shares have climbed sharply amid mounting speculation, fuelled by government comment, that PepsiCo, the maker of soft drinks and snack foods, is preparing a hostile bid for Danone.

Danone, a major food, beverage and dairy group, itself vowed Thursday to “fight” to keep its independence.

The government has made clear it intends to repel any such bid, in response to deep concerns in France that free markets threaten French job security rules and may increase high unemployment.

The outspoken interior minister, Nicolas Sarkozy, a likely presidential candidate in 2007 who argues for reform in many areas, earlier Thursday backed Prime Minister Dominique de Villepin in saying that foreign intruders must be repelled.

Sarkozy, also the head of the governing UMP party, said that public intervention would not represent outdated “rampant nationalization”, but would serve the vital interests of the nation.

“Our engagement, in agreement with the management of Danone, will last until we have found a solution guaranteeing the persistence of this company, its know-how and its employees,” he said.

“It is not a matter of engaging in a rampant nationalization of the French economy. That era is gone,” said the interior minister, who most recently was the economy and finance minister.

“But it is important that one knows the state has not renounced and will not renounce the use of all the powerful means at its disposal to protect the economic and social interests of France.”

On Wednesday, Villepin had referred to Danone as “one of our industrial treasures” and vowed the government would “defend the interests of France”.

Groupe Danone chief executive Franck Riboud said in the financial newspaper Les Echos on Thursday that he would “guarantee the culture and the independence” of Danone. “I will fight for that.”

Riboud added that he had received no approach from PepsiCo or any other company: “There’s been nothing, whether close contact or distant, informal or formal… Does Danone need anyone else? I reply ‘No’.”

PepsiCo has repeatedly denied a press report that began the latest rumours to the effect that it had acquired 3.0 percent of Danone. It has declined further comment.

Finance Minister Thierry Breton broke his silence in the debate and said that Danone would be protected by the government’s use of “a framework of rigorous and strict laws”.

Earlier on Thursday, Danone, the world’s leading maker of milk products and second-biggest in bottled water and biscuits, had unveiled first-half results showing a 6.5-percent growth in sales, a result which Riboud told the newspaper was “better than we had hoped”.

Danone is a fully quoted private company and a leading stock on the French CAC 40 index.

The price of shares in Danone fell by 3.78 percent to EUR 89.815 in midday Paris trade, after two days running of strong gains driven by the bid speculation. Meanwhile, the CAC 40 index was showing a gain of 0.34 percent.

The Danone share was affected by profit taking after broker downgrades and bullish comments from the chief executive and the government on the company’s independence that had dented its speculative appeal, dealers said.

Danone shares had climbed 5.76 percent on Wednesday and 16.5 percent on Tuesday.

Copyright AFP

Subject: French news