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Kraft Foods in Danone takeover rumour

By staff reporter , 23-Jun-2006

French dairy group Danone has seen shares rise after rumours again surfaced that the firm may be taken over by a foreign company, this time Kraft Foods.

Roger Deromedi, Kraft's chief executive, told France's Le Figaro newspaper that Kraft was interested in investing in France and was particularly keen to target dairy, beverages and biscuits.

His comments have re-ignited rumours that Kraft may be assessing a takeover bid for Danone, France's iconic dairy, drinks and biscuits group.

Danone's shares had risen more than three per cent in a day by lunch on Friday, as speculation has grown.

Takeover rumours have been floating around Danone on and off for almost a year, beginning with whispers of a PepsiCo bid last summer.

Opposition from the French government means any move for Danone could be tricky, however.

France's prime minister Dominique de Villepin pledged to defend Danone as a "national treasure" during the PepsiCo rumours last summer. And, the government recently indicated that Danone would be included on a list of 20 French firms that could not be taken over by foreign companies.

The European Commission criticised the move, warning of a return to economic nationalism in Europe.

Analysts also pointed out that French companies took over more foreign rivals in 2005 than most other countries' firms.

Franck Riboud, Danone's chief executive, said last September he had no desire to see regulatory defence measures for Danone. "Sanctuaries are for relics, whereas Danone thrives on the competition it faces in all its markets."

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