Amidst growing political instability in Russia, French food group Danone has postponed its planned takeover bid for Russian dairy products and juiceproducer Wimm-Bill-Dann.
The Financial Times reports that the decision comes following the highprofile arrest of YUKOS chief Mikhail Khodorkovsky, a move that is seen as acrack down on business corruption in the country. YUKOS is Russia's biggest oil group.
The FT report said that unnamed individuals close to the Danone-WBDdiscussions had not given specific reasons for the postponement of thebid.
The report added that the delay in the deal was the latest indication ofwidespread concerns from foreign investors about the level of politicalstability in Russia following President Vladimir Putin's decision to backthe federal prosecutor in its investigation of the oil firm.
Earlier on in the month Danone CEO Franck Riboud had confirmed that hiscompany was in talks to buy WBD, but no further information was madeavailable at the time.
Following the most recent announcement, both Danone and WBD have refused tomake any further comment on the politically sensitive matter.
Currently Danone holds 7.2 per cent of the capital in WBD. The Russian dairyand fruit juice processor, which is believed to have a market value of $900million, has made significant investments in recent years in an effort toattract outside re-investment. The company has expanded its portfolio intothe all-important bottled water segment and has increased the size andefficiency of its current production facilities.