Danone Announces Rights Issue Plan to Raise € 3 Bn

Danone’s Board of Directors takes the view that, in the current changing environment, it is appropriate and in the best interest of shareholders to proactively optimise the capital structure of the Company.

26/05/09 Danone has announced its intention to raise approximately € 3 billion of equity capital through a Rights Issue. Danone’s Board of Directors takes the view that, in the current changing environment, it is appropriate and in the best interest of shareholders to proactively optimise the capital structure of the Company thereby increasing the financial and strategic flexibility of the Company.

The Rights Issue will be structured as an offering of preferential subscription rights to existing shareholders, enabling them to preserve their proportionate interests. The proceeds of the Rights Issue will be used principally for the reduction of Danone’s net financial debt thereby enabling Danone
- to strengthen its capital structure, reduce its financial leverage and improve its credit
metrics;
- to increase its financial and strategic flexibility, with a view to support its organic growth
model and finance potential add-on acquisitions.

With regards to the proposed payment of the 2008 dividend in shares, the results show a wide acceptance by Danone’s shareholders. Shareholders representing 62% of outstanding shares elected to receive the dividend in new shares, corresponding to the issuance of 11,216,756 new shares. Shares received pursuant to the option to receive the dividend in shares will be paid on May 27th 2009 and will be eligible for attribution of the aforementioned preferential subscription rights.

The Company reiterates its targets for full year 2009, excluding the dilutive effect of this intended transaction for the purpose of its underlying fully-diluted earnings per share target:
- like-for-like sales growth of a few points below the medium-term guidance;
- like-for-like continued improvement of the trading operating (EBIT) margin;
- a +10% growth of its underlying fully-diluted earnings per share on a like-for-like basis.

Danone is being advised by J.P. Morgan and CALYON in contemplation of the Rights Issue. Danone intends to launch the Rights Issue in the near future, subject both to market conditions and internal corporate approval of final terms and conditions. The launch of the Rights Issue will also be subject to the clearance (visa) by the French “Autorité des marchés financiers” (Financial Markets Authority) on the related prospectus.