On Wednesday 20 April, the Danone title suddenly flared up on the Paris stock exchange. In fact, halfway through the session, it was trading above EUR 57, a rebound of nearly 9%. It had been a long time since he had been to such a party. That same morning, the agri-food group announced a turnover increase of 7.1% to 6.236 billion euros over the first three months of the year. A performance that is superior to investor expectations.
This momentum is largely related to the significant price increases applied to all products and generalized to the company’s key markets. But also the recovery in the sale of bottled water brands, hit a year earlier by the restrictions imposed to contain the corona virus. However, Danone reiterated its annual targets. That is an organic revenue growth of between 3% and 5% compared to 2021 and an operating margin that decreases to 12%.
This financial publication alone does not explain the stock market reaction. At the same time, the letter a revived speculation about a possible importance of the dairy group Lactalis to all or part of its great rival. This rumor has not stopped since the outbreak of the governance crisis at the head of Danone. After the ouster of Emmanuel Faber in March 2021, Antoine de Saint-Affrique took over the overall management of this flagship of the CAC 40 in September 2021. After a period of observation, he revealed his strategic vision in March.
governance crisis
On this occasion, he sparked the hopes of activist shareholders who wanted Danone to sell entire portions of his business, sometimes his dairy, sometimes bottled water. Mr. de Saint-Affrique, on the other hand, believes that the strategic positioning of the group on its activities of fresh and plant-based dairy products, bottled water, infant nutrition and specialty foods, all potentially growing, is in line with market trends. He insisted on his desire to preserve these three pillars. However, he acknowledged that he was willing to clean up the portfolio, with targeted divestments and acquisitions, which could affect 10% of sales. Danone confirmed this position on Wednesday.
Lactalis, in turn, has grown through acquisitions and reached a turnover of 21 billion euros, almost exclusively in dairy products. For example, he crumbled the nugget Stonyfield, in the United States, an organic yogurt company that Danone had to sell after the acquisition of the American WhiteWave. But the pinnacle of this strategy remains the deranged but ultimately successful takeover bid for Italy’s Parmalat.
Lactalis also went through a turbulent period at the beginning of the year that shook the board. philippe palazzi, director of lactalis, hastily left office after only fifteen months in office. Irreconcilable disagreements have arisen with Emmanuel Besnier, the president and shareholder of the world’s number one dairy. Since then, Mr. Besnier has taken over the reins of the family business, assisted by a general manager of operations. Contacted after speculation about her possible interest in Danone, Lactalis replied only that she: “will not comment on this”†
