EU extends review of Kraft Danone deal

By Charlotte Eyre

- Last updated on GMT

Related tags: European union, Kraft foods, European commission, Kraft

The European Commission announced it has extended the time
limit on its inquiry into Kraft's proposal to purchase
Danone's biscuit division, after both parties submitted new
information relevant to the deal.

The proposed deal, worth €5.3bn, has been extended from the original date of 24 October to 9 November, the Commission said, because both parties have submitted undisclosed "new data" that needs reviewing. Over the next two weeks, the Commission will review all the information at hand before deciding whether to allow the deal, conditionally allow the deal, refer it to a member state competition authority or open up a new in-depth investigation. Kraft first made the offer for the biscuit division of France-based Danone last July, hoping to consolidate its position as the number one biscuit maker in the world. "This proposed acquisition makes great sense for Kraft,"​ Irene Rosenfeld, Kraft chairman and chief executive officer, said at the time. "This growing, high-margin business will give Kraft another core growth category inEurope, a cornerstone for faster growth in emerging markets, and the best portfolio of iconic biscuit brands in the world,"​ Rosenfeld said. If the deal is given the green light, Kraft will acquire the popular European brands LU, Tuc, Prince and Mikado. Perhaps even more crucially, the US giant could also gain access to critical emerging markets such as China, Russia, Poland, Indonesia and Malaysia, which currently account for 25 per cent of Danone's biscuit trade. Rosenfeld was keen to stress in the summer that Kraft would keep the Danone biscuit headquarters in metropolitan France, however a successful deal could cause unrest in France, where there is often a desire to protect national businesses from global or US firms. In 2005, government ministers in France complained when rumours started to circulate that PepsiCo wanted to buy Danone. They feared that the "hostile takeover" would result in a loss of French jobs, and so launched a campaign to protect 20 French companies, including Danone, which they viewed as a "national champion". However, the Financial Times reported at the time that a sales would help boost Danone profits, as its biscuit division has seen the slowest growth rates over recent years. Kraft had worldwide biscuit sales of $5bn in 2006, while Danone's biscuits and cereal products had a turnover of €2.2bn ($3bn) in 2006, and experienced 3 per cent growth. The dairy and beverage divisions on the other hand have seen 10 and 11 per cent growth respectively, the FT said.

Related topics: Kraft Foods, Markets

Related news

Show more

Follow us


View more