Danone Enters Infant Formula Market With Numico Acquisition

Groupe Danone's $16.8 billion acquisition of Royal Numico expands the firm's healthy nutrition focus with entry into the infant formula market and a stronger position in clinical nutrition, the company says July 10.

"Numico's presence in attractive and growing markets in baby food and clinical nutrition around the world will provide Danone with an additional pillar to drive future growth and profitability," the firm says in a release.

The combined businesses will create a company, "with the clearest and most powerful health positioning in the world," Danone CEO Franck Riboud added.

Numico CEO Jan Bennink noted the firm's positioning in Danone "will ensure its continued growth momentum for the future."

Numico has struggled the past few years with difficult sales and costs related to ongoing ephedra litigation (¹ (Also see "GNC Goes For $750 Mil. As Numico Exits Dietary Supplement Industry" - Pink Sheet, 20 Oct, 2003.), p. 15).

In an agreement expected to be completed within a month, Danone offered to pay 55 euros ($75.60 U.S.) in cash per share for all outstanding Numico ordinary shares.

The price, which is 12.3 billion euros ($16.8 billion) in total, represents a 44 percent premium over the average closing share price over the last three months, according to the firms.

The transaction will add Numico baby and toddler food brands Nutricia , Milupa , Cow & Gate and Dumex as well as other brandsto Danone's existing consumer goods portfolio, which includes the brands Activia yogurt and Evian water.

The firms say Numico's board will unanimously recommend shareholders accept the offer.

Danone plans to keep Numico's structure intact, operating it as a new division. Numico will remain headquartered in the Netherlands, and the offer "is not expected to have significant negative consequences" on the businesses' employment levels, Danone says.

- Eileen Francis ([email protected])