Danone, the European foods giant, announced a €12.3 billion (£8.3 billion) deal yesterday to buy Royal Numico, of the Netherlands, in a move that secures for the French company the group that owns the Cow & Gate, Nutricia and Milupa baby foods brands.
“The supervisory board and executive board of Numico will unanimously recommend that Numico shareholders accept the offer,” the companies said in a joint statement after Danone made its €55-a-share offer.
The brands, which bring with them the Aptamil line of baby milk formula products, are regarded as a natural fit with Danone’s Bledina infant nutrition range. The announcement came after trading in Numico’s shares had been suspended at the request of the AMF, the Dutch market regulator. The stock had jumped about 12 per cent during the day as market traders talked of an approach by Danone or PepsiCo, of the United States. Shares in Numico rose 17 per cent last week, fuelled by takeover rumours.
The offer price represents a 44 per cent premium over the Dutch company’s average price over the past three months. No large-scale job losses are planned in either company and Danone has given assurances that Numico will remain headquartered in Schiphol. “Numico will operate as a division with Danone,” an adviser to the Dutch group said.
Jan Bennick, the chief executive of Numico, will resign after the deal is completed. He said: “Once you have been CEO, it is quite hard to not to be CEO. Two captains on the same ship is probably not ideal.”
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Numico, which had sales of €2.6 billion last year, expects sales to grow by 10 per cent to 12 per cent this year. Danone is paying a multiple of 4.4 times annual sales and a multiple of 26.8 times underlying earnings. The enterprise value for the Dutch company is €12.3 billion.
Numico portrays itself as a growth story, with sales expected to increase in double digits outside Europe. In other regions there is little or no competition in prepared baby foods, and mother’s milk is the source of nourishment.
Danone is widely regarded as being on the acquisition trail, after the announcement last week of exclusive talks to sell its Lu biscuits and cereal snacks business to Kraft Foods, of the United States, for a higher-than-expected €5.3 billion.
Franck Riboud, the chief executive of Danone, said that the company was seeking to buy medium-sized companies.
Danone’s plans to concentrate on higher-margin businesses, such as bottled water, and on high-value milk products, in which it holds leading market positions.
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The sale of the biscuits division has raised the political temperature, as the workforce fears that there will be job losses. Kraft has tried to calm labour concerns by giving a commitment to maintain employment at present levels for three years.
A sale of the Lu division sparks political heat for President Sarkozy of France, who was a champion of economic nationalism when he was Finance Minister in the previous Government.
Mr Sarkozy brokered an all-French merger between the pharmaceuticals groups Sanofi and Aventis to keep Novartis, of Switzerland, at bay, and he backed a bond issue for Alstom to prevent a bid for the engineering group by Siemens, of Germany.