France Takes to the Barricades as PepsiCo Eyes Danone

22 July 2005

Not since the sans-culottes took to the Paris barricades in 1789 has the French nation unified with such enthusiasm in common cause against a foe.

Today, however, the challenge is directed not at the Bourbon monarchy of Versailles but the PepsiCo empire of upstate New York - which is rumoured to be eyeing Groupe Danone, itself a global entity and the crown jewel of the French food and beverages industry.

In the past month shares in Danone have risen 27% to an alltime high - but it is uncertain whether this is the cause or the effect of the acquisition rumours.

With global sales in 2004 of €13.7 billion ($16.5bn; £9.54bn) and net profits of €917m, Danone is a mouthwatering morsel for any predator big enough to swallow it. Such giant gullets not only include PepsiCo and Coca-Cola but also the likes of Nestlé, Kraft and Unilever.

Most observers have ruled out Procter & Gamble as a likely contender, given that its gastric juices are at present wholly occupied with the ingestion of Gillette.

Although PepsiCo has yet to make its move, it is seen by the French as the most likely villain in a hostile takeover drama. The US company refuses to comment on the matter other than to deny it has already taken a 3% stake in Danone.

It has, however, appointed two banks known for their aggression and experience in hostile takeovers - Morgan Stanley and UBS - to advise on European expansion.

If battles were won by rhetoric, PepsiCo (or whoever) would already be dead in the water. Daily newspaper Le Monde quotes Danone's former ceo Antoine Riboud: "Danone is like Chartres cathedral, and one does not buy the cathedral of Chartres!"

Meanwhile, employment minister Jean-Louis Borloo has assured all patriots that the government is "looking at doing all we can to try to oppose a hostile takeover". Not to be outdone in the patriotism stakes, former socialist finance minister Dominique Strauss-Kahn said many French people would "react very badly to what they would see as a direct attack on their identity".

Danone itself is no stranger to takeover warfare, having made forty acquisitions in Asia, Latin America, central Europe and Africa in recent years. Its 90,000-strong workforce ranges across 120 countries, only a minority of which (11,700) is employed in France.

Under French takeover law a predator would need to gain more than two thirds of Danone's equity to win control.

Data sourced from; additional content by WARC staff