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Danone bids for baby food maker

July 10, 2007|From Associated Press

PARIS — Groupe Danone, the maker of Dannon yogurt and Evian water, aims to strengthen its baby food business, bidding Monday to buy Royal Numico for $16.8 billion.

The addition of Numico would make French-based food giant Danone one of the world's largest players in the $24-billion baby food industry, which experts expect to grow 25% by 2010.

"With this project, we are designing a new Groupe Danone, enhancing dramatically its growth profile and its growth potential for years to come," Danone Chief Executive Franck Riboud said in a statement.

Danone is offering $75 a share, a 44% premium over the average share price over the last three months, according to a joint statement by the two companies.

Netherlands-based Numico, the maker of the Olvarit, Bambix and Nutrilon baby food brands and clinical nutrition products, said its board would recommend that shareholders accept Danone's offer.

In 2005, Numico was the world's third-largest seller of baby food, controlling a nearly 10% stake in the world market, according to data from Euromonitor International. That year, Danone ranked eighth.

Danone makes baby food under the Danette brand name. Danone and Numico expect that an "agreement can be reached" and will hold a joint news conference today.

Numico said Monday that it would seek to withdraw its shares from trading "as soon as possible," providing Danone's offer is declared unconditional. Shareholders will be able to vote on the deal in a special meeting in mid-September, when the deal's terms and conditions will be published. A settlement date is expected in early October.

Numico has seen particularly strong growth in Eastern Europe and Asia. The company posted a profit of 202 million euros ($265 million) in 2006, while sales rose 32% to 2.64 billion euros ($3.47 billion).

Numico CEO Jan Bennink said the offer was "a very attractive proposition for all of our stakeholders." The bid, which Numico's board will recommend to shareholders, is not expected to lead to job losses, both companies said.

Bennink said during a conference call that he planned to step down after the deal was completed.

Danone's move follows rival Nestle's $5.5-billion bid for Gerber Products Co., which will give Nestle the largest share of the global baby food market. It also helps further Nestle's recent focus on health and nutrition after its purchases of weight control company Jenny Craig Inc. and Novartis Medical Nutrition.

Danone's bid for Numico comes less than a week after the company received a $7.2-billion offer for its cookie and cereal division from Kraft Foods Inc.

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