Pepsico to buy Danone ?

[Masquerouge]

http://www.ajc.com/business/content/business/coke/0705/19bizdanone.html

Basically, there are rumors spreading that Pepsico, owner of, well, Pepsi, but also Tropicana and Frito lays brands, will try to make a hostile takover of Danone (known in the US as Dannon), a French giant owning the Danone yogurhts, Evian water, Lu cookies, and so on.

Now gentlemen, if you want to watch some anti-americanism in action, just listen to the French political class. Even though Danone is a 100% PRIVATE company, French politicians have already started an uproar because they don't want to see a French "jewel" being perverted by the evil hands of an American company.

This is the French article
http://www.lemonde.fr/web/article/0,1-0@2-3234,36-673923@51-648146,0.html

Jean-Louis Borloo, the French Ministre de l'emploi (French secretary of employment, if you want) said that "everything will be done to oppose a hostile takeover. Danone is more than a crown jewel, it's a specific company because it plays an important role in our agricultural production"
Mr. Lemetayer, head of the agricultural lobby, even threatened that "Danone has to buy one billion liters of milk every year to French producers, and could not survive without it"

To be fair, French "liberaux", that is to say, supporters of free-trade, in the government, are trying to say that the State must not interfere in private business, and that Danone is perfectly capable of defending itself, as it has already done in the past.

Now this is weird on several levels :
1. The French government can do nothing about it if PepsiCo wants to buy Danone. It can waive its arms and cry, it can threaten and stutter, it can run around in circles, but it can do nothing about it. The only sector it has power on is the defense industry.
2. The French government finds it perfectly ok when Renault or Pernod-Ricard buy foreign companies using the hostile takeover tactic, but suddenly when the game is played upon us, it's not fair anymore ?
3. Doesn't it remind you of Unocal and CNOOC ? Like you're perfectly ok to play by the rules as long as you're winning ?

 

[Uiler]

I don't think it really counts as anti-American unless:

1. They wouldn't have opposed it unless it was America.

and/or

2. They are making very blatant anti-American comments.

I don't see any of (2) yet, unless you want to actually translate a blatant anti-American insult. And (1), I think if it had been a British or German company they would have had a similar response. It's not anti-Americanism, just plain blind nationalism and a political class used to protecting the agricultural sector at all costs. I mean just look at the trade barriers they put up to developing countries and I don't think that's got anything to do with America.

As for fair trade - as I pointed out in another thread, fair trade and the freedom of capital to move basically comes down to "only if it's good for me." in every single country and corporations.

With UNOCOL, seriously, if it had been a British company that wanted to buy UNOCOL, do you think that with it controlling 1% of the US' oil supply anyone in the US would give a damn? The opposition is clearly aimed at China, as well as all the hype about the growing military power of China that seems to dominate all the news articles about it. It is very clear that opposition is UNOCOL is aimed specifically because it is a Chinese company. In this case it could be a company from China and the French would *still* be making all the same noises so it's nowhere near the same situation.

http://www.ajc.com/business/content/business/coke/0705/19bizdanone.html

Basically, there are rumors spreading that Pepsico, owner of, well, Pepsi, but also Tropicana and Frito lays brands, will try to make a hostile takover of Danone (known in the US as Dannon), a French giant owning the Danone yogurhts, Evian water, Lu cookies, and so on.

Now gentlemen, if you want to watch some anti-americanism in action, just listen to the French political class. Even though Danone is a 100% PRIVATE company, French politicians have already started an uproar because they don't want to see a French "jewel" being perverted by the evil hands of an American company.

This is the French article
http://www.lemonde.fr/web/article/0,1-0@2-3234,36-673923@51-648146,0.html

Jean-Louis Borloo, the French Ministre de l'emploi (French secretary of employment, if you want) said that "everything will be done to oppose a hostile takeover. Danone is more than a crown jewel, it's a specific company because it plays an important role in our agricultural production"
Mr. Lemetayer, head of the agricultural lobby, even threatened that "Danone has to buy one billion liters of milk every year to French producers, and could not survive without it"

To be fair, French "liberaux", that is to say, supporters of free-trade, in the government, are trying to say that the State must not interfere in private business, and that Danone is perfectly capable of defending itself, as it has already done in the past.

Now this is weird on several levels :
1. The French government can do nothing about it if PepsiCo wants to buy Danone. It can waive its arms and cry, it can threaten and stutter, it can run around in circles, but it can do nothing about it. The only sector it has power on is the defense industry.
2. The French government finds it perfectly ok when Renault or Pernod-Ricard buy foreign companies using the hostile takeover tactic, but suddenly when the game is played upon us, it's not fair anymore ?
3. Doesn't it remind you of Unocal and CNOOC ? Like you're perfectly ok to play by the rules as long as you're winning ?

 

[Sparta]

In this case it could be a company from China and the French would *still* be making all the same noises so it's nowhere near the same situation.

Maybe China, but who else? You really think there'd be the same stink raised if it were a luxembourgian (?) company instead of one originating in the land of 'freedom fries'? I can't see farmers threatening to not sell their livelihood if Danone were being sold to an EU compatriot company. Maybe it's just my uneducated perspective, but I do see parallels to the CNOOC/Unocal deal, personally (in both cases I am/was strongly for the 'free trade' side, FWIW).

Regardless, certainly an interesting article. Thanks, Masquerouge!

And Dannon apple yogurt rules.

Anyone have any idea how this could affect the Pepsico stock price (if approved)? My WAG would be negatively, but I'm not very educated on such topics.

 

[Uiler]

Well, yes I do think so. The French are notoriously protective and "patriotic" about their agricultural industry. As I pointed out they treat developing countries very badly in terms of gaining access to French markets and that has absolutely nothing to do with the US. Look how they rip off the rest of the EU to protect their farmers too. When it comes to their farmers they don't give *any* concessions to fellow Europeans. Look at the response to recent calls to renegotiate the agricultural part of the EU agreements. I mean in Japan they deny access to Australia for the sale of rice. However it has nothing to do with Australia specifically. They deny access to *everyone* who wants to sell them rice. You see in Japan, the concept of Japanese rice being the best and Japanese rice as being almost some sort of holy object (strongly encouraged by the government that relies heavily on country areas for support) means that there is strong opposition to the importation of any rice. Once where there was a shortfall and they were forced to import rice there was a mad rush by consumers to stock up on the Japanese rice.

EDIT: I forgot to mention how the French forced Australian wine makers to not be allowed to use common names like "Champagne" to protect their wine growers. Similar thing with cheeses. When it comes to their farmers, France is well known for being very very nasty to everyone. I guess the company being American might add salt to the wound but if the company was from *any* country outside of France they would oppose it.

Maybe China, but who else? You really think there'd be the same stink raised if it were a luxembourgian (?) company instead of one originating in the land of 'freedom fries'? I can't see farmers threatening to not sell their livelihood if Danone were being sold to an EU compatriot company. Maybe it's just my uneducated perspective, but I do see parallels to the CNOOC/Unocal deal, personally (in both cases I am/was strongly for the 'free trade' side, FWIW).

Regardless, certainly an interesting article. Thanks, Masquerouge!

And Dannon apple yogurt rules.

Anyone have any idea how this could affect the Pepsico stock price (if approved)? My WAG would be negatively, but I'm not very educated on such topics.

 

[nonconformist]

Mmmm, Danone?

 

[Sickman]

The French are notoriously protective and "patriotic" about their agricultural industry.

I agree with Uiler and I want to add that France isn't the only country that is protective.
There have been outcries in numerous countries when foreign company has been planning to buy "jewel" of this other country even though company has been completely private.
It's very common phenomena and nothing to do with anti-americanism.
Or at least if they haven't especially named american company as undesirable buyer.