Danone plays it cautious

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Danone has recently increased its stakes in both Yakult and
Wimm-Bill-Dann, but claims it currently has no plans for a complete
takeover of either firm.

French company Danone​ is linked with almost any potential takeover target in the dairy sector these days, or so it seems, and the group has broken its habitual silence on two companies with which it has been linked most recently - Yakult of Japan and Russia's Wimm-Bill-Dann.

Speaking at a dairy industry conference in Spain, the company's finance director Emmanuel Faber told reporters that Danone had no intention of increasing its stake in the health drink producer Yakult​, despite the fact that it already has a 19 per cent stake in the firm.

According to local press reports, Faber said that the purchase of the stake was part of a co-operation agreement with the Japanese group, but that there were no plans for any further share purchases, and a complete takeover was certainly out of the question at the present time.

Danone bought 14 per cent of Yakult in April this year after taking an initial stake of 5 per cent in April 2002, prompting market speculation that the French group was looking to expand its operations in the fast-growing health products sector, where Yakult is a well-established name with operations in 18 countries and sales of more than ¥230 billion (€1.7bn) in 2002.

The other company with which Danone has been linked in recent months, Wimm-Bill-Dann​, was also discussed at the conference, albeit obliquely. Danone's chief executive Franck Riboud told investors at the seminar that the company did expect to increase its share of the Russian dairy product sector to around 20 per cent by 2008, but declined to say whether that would be through the purchase of WBD.

Like Yakult, Danone has a minority stake in WBD - 7.2 per cent - and the Russian firm has confirmed that some of its leading shareholders are in talks with Danone over a possible buyout. Danone has traditionally refused to comment on the rumours, and all Faber would tell analysts at the conference was that Danone had known WBD for some time, and that they would "see what happens"​, press reports said.

For Danone to increase its share of the Russian market from 16 per cent to 20 per cent in five years would mean a trebling of sales, something which even Danone might find hard to do without a strategic acquisition.

And with giants such as Nestlé not yet present in the dairy market in Russia but undoubtedly aware of the huge potential there, the chances are that WBD will become an increasingly attractive acquisition prospect for one or more of the major players.

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