Danone Eyes WBD Acquisition

Dairy and juice giant Wimm-Bill-Dann said Monday that it is in discussions with Paris-based dairy products maker Groupe Danone that "may or may not result in the acquisition of all or a majority of the shares of the company."

Wimm-Bill-Dann said in a statement that it is participating in discussions at the request of some of the company's shareholders.

"No agreement with respect to price or other material terms or conditions of a transaction has been reached," the statement said, adding that "no assurance can be made that these discussions will continue or that any agreement ... will be reached."

The company released the statement to clarify news reports that appeared after its share price rose by almost 20 percent in the last month.

Danone already holds a 6.25 percent stake in Wimm-Bill-Dann, having acquired it in February 2002 at the time of Wimm-Bill-Dann's initial public offering on the New York Stock Exchange. Through that IPO, Wimm-Bill-Dann became the first Russian consumer goods company to float shares abroad and the country's fourth firm to list in New York.

Earlier this month, Wimm-Bill-Dann said it was not aware of Danone's plans to further increase its stake in the company. "I would be flattered if a company like Danone wanted to buy a stake ... but I don't know of any such plan," Wimm-Bill-Dann chairman David Yakobashvili was quoted by news agencies as saying on June 4.

Reached by telephone, a Danone spokeswoman in Paris declined to comment Monday evening.

Andrei Ivanov, an analyst at Troika Dialog, said Wimm-Bill-Dann sent out the statement in an attempt to uphold corporate transparency norms and to dispel the various rumors that have swirled through the stock market.

"If it goes through, the deal makes sense for both of the parties," he said. "The exact structure of the deal is not clear, since Danone will not be interested in Wimm-Bill-Dann's juice business."

Vladimir Savov at Brunswick UBS echoed that, saying Danone might swing a deal to acquire only Wimm-Bill-Dann's dairy business.

"This could be an acquisition deal, beneficial to all shareholders at Wimm-Bill-Dann, or some sort of joint venture or partnership, he said.

"At this stage it is hard to estimate the potential value of any transaction, but Wimm-Bill-Dann looks expensive on fundamentals," he said.