Opinion
Would Danone really ever move out of water?
Speculation is building that yogurt to bottled company Group Danone might sell it water division. In Paris trading, Danone’s shares rose to their highest point in over two years following a report in the Wall Street Journal that suggested three different Japanese companies may be interested in buying its bottled water unit.
The report said that Danone and Kirin Holdings Co are in initial talks through representatives. It also suggested that Suntory Holdings and Asahi Breweries may be interested in buying part or all of the division, which includes the Aqua, Badoit, Evian and Volvic brands.
Faced with slowing sales at home and fueled by close to zero interest rates, Japanese companies have been taking an increasing interest in acquisitions abroad. One recent example is Suntory buying Orangina last year.
“These Japanese companies are desperately looking to acquire something to diversify from their home market,” said Standard & Poor’s equity analyst Carl Short. “I’m a bit surprised. If you get rid of bottled water, essentially you’d just have dairy and nutrition, and I’d wonder if that’s broad enough for an international food company.”
According to the Wall Street Journal report, the bottled water business could be sold for $5 billion to $7 billion.
A sale would then lead to speculation about what Danone might buy next, Short said.
“This seems unlikely to us as the price mentioned seems pretty low and Danone does not need the cash anyway,” one Paris-based trader said, while another commented: “The stock is rising on the WSJ story. But I don’t see Danone parting with Evian, such a national pride.”
Something tells me this story will soon evaporate, but if not then you can rely on www.foodbev.com to keep you up to speed with developments.
Source: Wall Street Journal / San Francisco Chronicle
About the author
Bill Bruce is group editorial director of FoodBev Media
Also by this author
See also
Latest news
| |