Tuesday, July 10, 2007
Groupe Danone S.A. yesterday announced its intentions to make a € 55.00 in cash per ordinary share bid for all of the outstanding shares of Royal Numico N.V., a Dutch company listed on Euronext Amsterdam. The Supervisory Board and Executive Board of Numico also announced that it would unanimously recommend that Numico shareholders accept the offer. The price values baby-food maker Numico at $16.8 billion dollars, and is a 44% premium to Numico's average closing price over the last three months.
Analysts were highly critical of the price being paid by Danone. “This is the most expensive large-cap deal in the global consumer space ever,” stated Andrew Wood, an analyst at Sanford C. Bernstein in New York. And many are speculating that the price and large acquisition are an anti-takeover maneuver by Danone to discourage takeover bids. “This is a defensive operation for Danone,” said Chicuong Dang, an analyst at Richelieu Finance. “They are making themselves bigger and less attractive to bidders such as PepsiCo or Coca-Cola.” (quotes as reported by Bloomberg).
Danone and Numico have yet to reach a definitive agreement on the making of the offer. But the parties announced that the offer is expected to commence in August 2007 and would be subject to at least 66 2/3% minimum condition. Interestingly, Numico has agreed to restrictions on its ability to initiate or encourage discussions with third parties in respect of any proposal that may form an alternative to the Offer. And Danone is entitled to a break fee of EUR 50 million in the event (i) the Numico Boards withdraw their recommendation; or (ii) an unsolicited offer is declared unconditional. Though the break-fee is small, these are American style transaction defense provisions that you do not normally see in Dutch deals. But the Dutch government has opted out of the 13th EU Company Law Directive on public takeovers to permit Dutch companies to utilize lock-ups of this nature. As takeover activity increases in the Netherlands, expect Dutch companies to further utilize American-style transaction defenses.