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Groupe Danone bids for Numico Baby-food Business
 
Garden of Healing®
 

Groupe Danone SA yesterday tendered a $16.8 billion offer for nutrition group Royal Numico in a bid to dominate the market for high margin, added-value products.
 
Netherlands-based Royal Numico specializes in baby food and clinical nutrition products under the brand names Nutricia, Milupa, Cow & Gate and Dumex, among others. The company currently employs about 13,000 people.
 
Danone is shifting focus to target growing consumer demand for healthier products. The company also wants to target high growth markets in which it can be a dominant player to offset rising commodity and input costs.
 
The all-cash offer has been accepted by Numico’s board. Danone’s chairman Franck Riboud said acquiring Numico would allow the company to move ahead of its rivals within the competitive marketplace.
 
The addition of Numico would make Danone one of the world’s largest players in the $24 billion baby-food industry. Experts expect this segment to grow 25 percent by 2010.

Riboud said the capture of Numico would allow it to cement its position as a health and nutrition company. Danone expects the acquisition would give it a top three presence in some of the world’s largest markets for nutrition and infant-based products.
 
Riboud cited an aging population, growing awareness of the importance of nutrition to health, and the rising costs of medical care, as the key factors that would continue to drive consumer demand for healthier products.
 
Riboud emphasised that dairy will remain Danone’s key focus. Once the Numico purchase is completed, dairy will account for 51 per cent of the company’s sales. Nutrition will account for another 22 per cent, just behind beverages with a 27 per cent share.
 
Besides sharpening its focus on nutrition, Danone would also increase its presence within the infant food market, where it has a limited presence.
 
Numico also has a strong portfolio in the market for health care nutrition, which Danone said it would move to exploit. The segment would grant the company a further focus for production of foods designed for the needs of babies and diabetic patients.
 
In recent weeks press reports have linked the company to a number of ventures particularly in India’s bottled water market. The company is currently second in the global market for mineral water products behind rival Nestle.

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