Danone seeks funds for acquisitions as dairy slump takes toll

Posted by Isobel Drake on 27th May 2009

The world’s largest yoghurt maker, Danone, has announced a 3 billion-Euro (A$5.4 b) rights offering, to secure acquisition funding as it predicts long-term market difficulties.

The French-based dairy firm will use the funds to reduce their debt to position themselves for minor acquisitions and growth in emerging markets. However, they have distanced themselves from any immediate takeovers, with CFO Pierre-Andre Terisse indicating they won’t make any purchases in the “coming weeks to months”.

Analysts believe that stagnation is some of the leading dairy markets will require the company to branch out to regions where they are not currently operating or boost their presence in countries where they only hold a niche position.

“We are seeing a structural slowing of functional dairy in many markets,” Citi analyst Jeff Stent noted, according to Bloomberg. “Geographic expansion will likely have to play a much greater role.”