PepsiCo Inc., in response to an inquiry from French regulators, said it is not planning an imminent takeover of French food and drinks company Danone SA despite weeks of intense speculation about a bid.
Pepsi's declaration to French authorities sent shares of Danone tumbling 7.5 percent yesterday after the stock had risen as much as 32 percent since the speculation regarding a move by the Purchase, N.Y., company surfaced in the French press in early July. Before the rumors, Danone's shares had been trading at about $87 but rose to a record $115.77 last week. The shares fell $8.02 yesterday, to $98.64.
A spokeswoman for French market regulator Autorite des Marches Financiers said it asked Pepsi last week whether it was preparing a bid for the Paris company. Late Friday, Pepsi responded that it was not, according to the spokeswoman.
The AMF also has opened a preliminary inquiry into whether anyone manipulated the market in Danone shares since the speculation took hold in recent weeks. A spokesman for Pepsi said there were discussions with the AMF on the matter. "PepsiCo has been consistent throughout this matter that we do not comment on rumors," the company said in a statement. "When asked recently by the French government, we confirmed that we are in compliance with all French laws."
Pepsi's response to French authorities followed a chorus of opposition from politicians in France to the idea of a foreign takeover of Danone. As one of the few medium-size companies left in a sector dominated by giants, Danone has long been in the sights of its bigger rivals. French government ministers warned last week that the French establishment would move to defend Danone from a hostile takeover attempt.
Ball reported from London and Terhune reported from Atlanta.