QUELLE horreur! France woke up yesterday to the prospect of Danone, the quintessential French dairy company, falling under American ownership.

Imagine Chevrolet buying Citroën or Americans running the Louvre. The image was cited by one broker to explain the alarm in the Paris establishment yesterday over the prospect of PepsiCo taking over Danone, a name that is almost French for yoghurt.

Shares in Danone, which also owns the Evian mineral water brand, rose more than 13 per cent yesterday as markets gave credit to rumours that the American food and drink giant is about to pounce on one of the symbols of Gallic success. The French state is unhappy and is expected to help Danone to mount a defence.

“I am furious,” said Patrick Ollier, an MP in President Chirac’s Union for a Popular Majority who heads the Parliament’s economic affairs committee. He said he was “very worried at the thought that Danone could pass under the control of Pepsi-Cola”.

Thierry Breton, the Finance Minister, was also concerned and was following the affair closely, M Ollier said.

PepsiCo has denied that it has built a stake in Danone, which is valued at €20.4 billion (£14 billion). However, the French company has long been seen as a ripe target and was yesterday reported to be battening down the hatches.

“The Danone culture cannot be bought,” Franck Riboud, the company’s president and son of Antoine Riboud, its founder, recently told a corporate meeting, according to Les Echoes, a business newspaper.

For a nation that still sees its industry in patriotic terms, the image of a predatory PepsiCo, maker of Pepsi, 7Up and Gatorade and other sodas, stalking the embodiment of French wholesomeness is hard to swallow.

France is still getting over the takeover, last March, of the legendary ski brand Rossignol by Quicksilver, the US sports company. The 2003 acquisition of Pechiney, the Gallic steel flagship, by Alcan of Canada, unsettled traditionalists who believed that the Government should have intervened. M Ollier promised that Danone would be defended. French state institutional investors such as the Caisse des Dépôts et Consignations, would be called in, he said. Commentators said that the state would do everything in its power to block the move. It is not clear, however, whether the Government and the close-knit business establishment really could muster much opposition.

France’s militant farm unions appeared uncertain over how to respond. Jean-Michel Lemétayer, chief of the FNSEA, the national farmers’ union, said that “it would be a pity if Danone, as a national flagship, loses its independence”, but he would not intervene in the event of a hostile takeover bid. “Unfortunately we are impotent,” he said. Food analysts said that the best hope for blocking a hostile acquisition would be a merger with a “White Knight”. The most cited candidate for this is Nestlé of Switzerland.

THE RIVALS

Danone
Present in 120 countries, particularly France, Italy and Spain
Main products Evian, Actimel, Volvic, Yakult, Shape
Employees 89,449

PepsiCo
Present in more than 200 countries, particularly US, Mexico and UK
Main products Pepsi-Cola, Mountain Dew, Lay's, Doritos, Tropicana fruit juice, Gatorade, Quaker cereals
Employees 153,000

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