Danone said to be in talks to sell bottled water assets to Japan’s Suntory Holding
November 10, 2011
The world's largest yoghurt maker and owner of Evian, Volvic and Badoit brands said it expects a positive year 2012 because of the robust growth in emerging markets, softening commodity prices and other benefits generated by buy and sell operations.
Danone is reportedly in talks to sell its bottled-water assets to Japan’s Suntory and is said to be looking to reach an agreement by the end of the year. Suntory in turn may be seeking to buy only the water operations in Asia, according to some reports. This hypothesis grows stronger when one reads an article uploaded on the company website in August, saying:
“Suntory beverage and food group continues to expand its business in new emerging Asian markets through the new Singapore company, maximizing group of companies' overall synergy in Japan, Asia, Europe, and Oceania. (…)”
Marco Gulpers, an analyst at ING Financial Markets who recently gave a recommendation to buy the Danone stock stated: “The water business has decent growth, but it’s slightly below the group average and profitability is also below average. If it means a swap with another nutrition business, that could make sense.”
It was reported that Danone met with Kirin, Asahi Breweries and Suntory last year, allegedly in order to estimate their interest in part or all of their water business. In addition, it has been suggested that an agreement has almost been reached in talks with a Japanese company over the Asian part of the unit.
Experts said last year that Danone was seeking $5 to $7 billion for the entire water business. Asked this specific question, spokesperson for Danone Sabrina Schneider refused to comment, as did Midori Takahashi, Suntory spokesperson.
The 2010 revenue of the Danone bottled water unit was 2.87 billion Euros ($4 billion), which equals to about 17% of the total sales of the company. The Osaka based Suntory, which is expanding abroad as population in Japan declines, is the Japanese partner of Häagen-Dazs ice cream, in addition to selling bottled water, tea and soft drinks.