Yogurt Fever: Epilogue

Posted by John Rosenthal

On Monday, the French Financial Market Authority (AMF) announced that it had received assurances from the PepsiCo Corporation that, contrary to widespread rumors, the latter was not in fact preparing a takeover bid for Danone. The announcement seems to have brought to a close France’s recent bout of “Yogurt Fever”. Indeed, already before the announcement, certain French media – notably Le Figaro – had regained lucidity and were posing skeptical questions about the rumored bid and even about the origins of the rumor itself. Perhaps because somewhat fevered is its normal condition, the temperature at Le Monde, however, evidently remains high. Thus the opening of a brief article on the affair in yesterday’s edition (dated 27 July):

After a week of reactions by the political class to the possibility of a stock market raid by PepsiCo on Danone, a number of questions remain unanswered. On Monday, 25 July, the latter issued a communiqué indicating that it “took note” of the declaration by the American group to the Financial Market Authority (AFM). PepsiCo does not envisage “at the moment an operation of this sort” with respect to the jewel of the French foodstuffs industry.

Note the use of the expression “stock market raid” in the opening sentence: a term which, as I pointed out in “Yogurt is a Strategic Industry”, would be factually inappropriate even supposing that PepsiCo was preparing an offer and hence only serves here to dramatize. Note too the description of Danone as a “jewel” – fleuron (literally, “floweret”) – of French industry. It will be recalled that this was the expression used by French Prime Minister Dominique de Villepin last Wednesday in announcing the intention of the French government to “defend” Danone. If Le Monde would like to retain any credibility, perhaps it should make efforts to take a bit of distance from the Quai d’Orsay – or at least to appear to do so.

The Le Monde article goes on to repeat a rumor according to which an unnamed financial establishment is supposed to have purchased 3% of Danone shares on behalf of PepsiCo: “a purchase that would have permitted…the American group to deny… having acquired such an interest, since, in effect, it is not PepsiCo that held them!” The exclamation point is apparently Le Monde’s manner of expressing wonderment at “Anglo-Saxon” deceitfulness. The cited source for this story?: an unnamed “person close to Danone”.

In the meanwhile, following the request of Colette Neuville, President of the Association for the Defense of Minority Shareholders (ADAM), the Financial Market Authority has opened an inquiry into a possible manipulation of the Danone stock price. Interviewed last week by the cable news channel I-Télé, Ms. Neuville had the audacity to note that a PepsiCo bid for Danone would be in the interest of Danone shareholders. Alluding to the rumored bid and the fevered response to it by the French government and in the media, Ms. Neuville referred to a “campaign of intoxication”.

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