Danone Makes EUR12.3 Billion Offer for Numico

Groupe Danone SA is set to become the biggest baby food maker in Europe once their acquisition of Numico comes through.

Groupe Danone SA is set to become the biggest baby food maker in Europe once their acquisition of Numico comes through. Groupe Danone SA offered to buy Royal Numico NV for 12.3 billion euros ($16.8 billion) in cash. The companies jointly announced that the expectation is justified that agreement can be reached in connection with a public offer by Danone for all outstanding ordinary shares of Numico at an offer price of € 55.00 in cash per ordinary share. The Supervisory Board and Executive Board of Numico will unanimously recommend that Numico shareholders accept the Offer. Danone said that the acquisition of Numico will further reinforce its positioning as a global leader in the consumer goods industry, with a growing emphasis on healthy nutrition. Numico’s presence in attractive and growing markets in baby food and clinical nutrition around the world will provide Danone with an additional pillar to drive future growth and profitability.

Danone recognizes the long history and successful business strategy of the Company and intends to maintain the current organization of its businesses intact and operate them as a new division within the enlarged Danone group. The French company will gain Numico's Cow & Gate and Nutricia brands and increase revenue 22 percent. Numico has 40 percent of the European market for baby foods, which are more profitable than Danone's yogurts and Evian water. Chief Executive Officer Franck Riboud agreed to sell Danone's cookie unit to Kraft Foods Inc. last week for 5.3 billion euros. Numico will continue to be headquartered at Schiphol. The Offer as such is not expected to have significant negative consequences on the employment situation of the combined business. Commenting on the proposed Offer, Franck Riboud (Chairman and Chief Executive Officer of Danone), said: “The price Groupe Danone is offering today is a reflection of the outstanding quality and positioning of Numico as one of the world’s leaders in healthy nutrition. The combination of the two groups will create a unique food company – the one with the clearest and most powerful health positioning in the world.

With this project, we are designing a new Groupe Danone, enhancing dramatically its growth profile and its growth potential for the years to come." Commenting on the proposed Offer, Jan Bennink, Chief Executive Officer and President of Numico said: “We are all very proud of Numico’s achievements over the last few years. Numico enjoys today very strong market positions and very attractive prospects, and the proposed offer by Danone is a recognition of the strength and quality of the group. I am confident that a combination with Danone and the position of Numico within the enlarged Danone group will ensure its continued growth momentum for the future. This deal is a very attractive proposition for all of our stakeholders, including our employees and shareholders.” The intended Offer would be a cash offer for all the issued and outstanding ordinary shares of Numico. Based on the intended Offer Price of € 55.00 per ordinary share, Numico's fully diluted share capital is valued at approximately € 12.3 billion. No dividends are expected to be declared prior to completion of the Offer. The Offer Price of € 55.00 per ordinary share represents compelling value to Numico shareholders and offers a 44% premium over the average closing share price over the last three months. Numico and Danone expect to reach definitive agreement on the intended Offer over the next weeks.

The commencement of the Offer is subject to the satisfaction or waiver of certain pre-offer conditions customary for a transaction of this kind, such as no revocation of the recommendation of the Offer by the Boards of Numico, the absence of a material adverse effect on the business of the Numico group, obtaining a positive advice of Numico’s works council and concluding the discussion with the trade unions. When made, the consummation of the Offer will be subject to the satisfaction or waiver of certain offer conditions customary for transactions of this kind, such as no revocation of the recommendation of the Offer by the Boards of Numico, the absence of a material adverse effect on the business of the Numico group and merger clearance filings. The consummation of the Offer will also be subject to at least 66 2/3% of the issued and outstanding share capital of Numico being tendered under the Offer. It is currently expected that the Offer can be made and that consequently an offer memorandum will be published in the month of August 2007.