Protecting Danone
Due to its narrow focus and relatively small size, Danone is potentially an attractive takeover target for its competitors, namely Nestlé and Kraft Foods. In mid-July 2005, the share price of Danone rose 20% within two weeks on rumours of a bid approach by PepsiCo, although this intention was denied. Upon realising that a takeover of a national treasure such as Danone by a foreign company was indeed possible in the capital markets, the "economically patriotic" French government stepped in by drafting a law to protect companies in "strategic industries" such as Danone from takeover. This has been dubbed the "Danone Law".
Speculation was renewed once again in mid-2006, when PepsiCo declared its intention to grow significantly in France through a sizeable non-hostile acquisition, and Kraft was also reported in Le Figaro, a French daily newspaper, as not having ruled out an acquisition on French soil. The stock market apparently marked down the possibility of a bid by PepsiCo following Danone's acquisition of Numico.
Read more about this topic: Groupe Danone
Famous quotes containing the word protecting:
“The manufacturing corporation, except in comparatively few instances, no longer represents a protecting care, a parental influence, over its operatives. It is too often a soulless organization; and its members forget that they are morally responsible for the souls and bodies, as well as for the wages, of those whose labor is the source of their wealth.”
—Harriet H. Robinson (1825–1911)