(Writes through with announcement, analysis, context)
By Ritsuko Shimizu
TOKYO, April 26 Japanese drink maker Yakult
Honsha Co Ltd and Danone SA scrapped a
longstanding alliance on Friday, denting speculation that the
French food-and-drink company might seek to buy out its partner.
Yakult and Danone, the Japanese company's biggest
shareholder, said they were replacing their strategic alliance
with a looser cooperation framework.
Scrapping the alliance removes any bar on Danone, the
world's largest yoghurt maker by sales, from launching a hostile
bid for Yakult, which makes fermented-milk drinks. Danone owns
20 percent of Yakult.
Before Friday's announcement, Yakult shares had been buoyed
by speculation that Danone might be seeking a merger with
Yakult, if not a hostile takeover or raising its stake, said
Mitsushige Akino, executive director and chief fund manager at
Ichiyoshi Asset Management.
But they plunged by their daily limit of 15 percent before
paring losses to end 5.7 percent lower at 4,420 yen after the
announcement, a sign investors think a bid is now less likely.
Tokyo's benchmark Nikkei index declined 0.3 percent. Danone
shares were trading 0.8 percent lower in Paris.
A person familiar with the situation said Danone is
unlikely to try to raise its stake, given its view that the
stock is already pricey and Yakult's high proportion of stable
Hostile takeovers in Japan are particularly difficult, in
part because of the country's intricate web of
cross-shareholdings, with many stakes taken to cement long-term
business ties, not to maximize profit.
The French company, which has a large overlap with Yakult on
some products, said last year it was interested in raising its
stake, according to Japanese media reports at the time.
The stock's partial rebound shows "the situation is still
unclear," Akino said. "We don't know yet if Danone is dissolving
the strategic tie-up with Yakult to wash their hands of the
whole affair or to launch a hostile takeover bid for Yakult."
Danone, whose brands include Actimel and Activia, said it
will remain "a major shareholder and long-term partner of
Yakult." Danone will keep three executives on Yakult's board,
both companies said.
The new cooperation framework, which replaces an alliance
struck in 2004, will continue collaboration in markets such as
India and Vietnam on probiotics and other products.
"We couldn't narrow our differences in such areas as
corporate culture and marketing techniques," Yakult chairman
Sumiya Hori told a Tokyo news conference.
Yakult vice president Yoshihiro Kawabata said the companies
"have eliminated constraints and will continue our cooperative
relations with a high degree of freedom."
(Reporting by Ritsuko Shimizu; Additional reporting by Nobuhiro
Kubo, Emi Emoto and Tomo Uetake; Writing by William Mallard;
Editing by Erica Billingham)