French food giant Groupe Danone has its sights set on infant formula maker Mead Johnson.
Reuters has reported that it has learned from inside sources that Danone, the company that makes Activia yogurt and Evian water, are intent on gaining a stronger footprint in global markets by acquiring Mead Johnson. The French food company had conducted an internal review and decided upon Mead Johnson as its preferred target, the source told Reuters.
According to the Dow Jones Business News, Mead Johnson’s shares went up by $8.85, an increase which seems to gauge the initial response of the market as a positive one. The shares were being traded at $100.06 in early afternoon trading on Friday.
The Groupe Danone is a French food-products multinational corporation based in Paris. It produces dairy products, bottled water, cereals, baby foods, and yogurts. In the United States, it is marketed as the Dannon Company.
The U.S. subsidiary in July announced in a press release that beginning in 2015, it will be the Official Yogurt Sponsor of the National Football League (NFL). The company first advertised in the Super Bowl, and has seen phenomenal growth in customer demand for its products, according to the release.
Mead Johnson is a major manufacturer of infant formula both domestically and globally with its flagship product Enfamil. The company dates back to a firm created by Edward Mead Johnson, one of the co-founders of Johnson & Johnson, who created his own business in 1895, which was renamed Mead Johnson & Company in 1905.
The company had global sales of $2.83 billion in 2009, with two-thirds of its revenue coming from outside the United States, where declining birth rates have led to a reduced market share. The company is gaining a presence in such emerging markets as the People’s Republic of China and India.
The Inquisitr reported that Mead Johnson’s infant product, Enfamil, was pulled from Walmart shelves back in 2011 after a 10-day-old baby was fed the formula.
The Mead Johnson takeover would add to a string of acquisitions by Danone.
The French company has been engaged in a frantic expansion drive in a bid to avoid being taken over. In mid-July 2005, the share price of Danone rose 20 percent within two weeks on rumors of a bid approach by PepsiCo.
Upon assessing the potential for a takeover of Danone, the French government passed a law to protect companies in strategic industries, such as Danone, from takeover. This has been dubbed the Danone Law.
Danone and Mead Johnson declined to comment on talks of a takeover.
[Image via Reuters/Regis Duvignau]