Danone eyes acquisition trail

By staff reporter

- Last updated on GMT

Related tags Danone Groupe danone Kraft foods

French food and water giant Danone has built up a war chest of up
to €1bn to spend on acquisitions over the next three to five years,
according to a report.

Antoine D'Estaing, Danone's chief financial office, told the Wall Street Journal​ the group was looking for small to medium businesses in new, emerging markets. The company, he said, was ready to spend between €500m and €1bn.

Consolidation has increased on the global dairy industry in recent years, with the top international firms grabbing bigger shares of the market, according to a recent report on Key Players in the Global Dairy Industry by Leatherhead International (LFI).

Danone itself has been plagued by rumours that other multinationals, PepsiCo and Kraft Foods, were preparing takeover bids for it.

Danone always denied the rumours, and French government ministers last summer vowed to defend the dairy, water and biscuits group from any takeover, calling it a 'national treasure'.

Danone chairman Franck Riboud said Danone could hold its own without government help. "Sanctuaries are for relics,"​ he said.

The group, which owns top brands such as Evian bottled water, Activia yoghurt and Lu biscuits, recently announced a nine per cent like-for-like sales rise for the first half of 2006.

Success was largely driven by high double-digit growth across emerging markets in Asia, Eastern Europe and Latin America; which persuaded Danone to raise its forecast for full-year sales growth from seven to eight per cent.

Growth in these markets was spurred on by new product launches in the health and functional food categories.

More acquisitions in emerging markets could help Danone to establish itself clearly as the world's third largest dairy firm, by sales. It sits third already, but only just, with New Zealand's Fonterra and Dairy Farmers of America close behind, according to LFI.

France has remained the trouble spot for Danone, although d'Eastaing said fresh dairy sales were starting to back in the right direction.

Related topics Manufacturers Danone Consolidation

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