21 January 1999: Danone, the French food based conglomerate, has reportedly appointed Credit Suisse First Boston (CSFB), the investment banking house, to sell its glass container business for more tha…
21 January 1999: Danone, the French food based conglomerate, has reportedly appointed Credit Suisse First Boston (CSFB), the investment banking house, to sell its glass container business for more than UK 450 million. Last August Danone merged its glassware division with Gerresheimer, of Germany, to create Europe“s second largest glass container producer. The combined business employs 8,800 staff and has a 23% market share with forecast sales of US$ 1.4 billion for 1998. It sells its products to a clutch of international blue chip groups including Coca-Cola and leading alcoholic drinks groups. But Franck Riboud, the chairman and chief executive, initiated a strategic review and decided to focus on its core strengths. This has led to the decision to appoint CSFB to seek an auction of the group instead of a flotation, as had been originally intended. The move will confirm the recent trend sweeping through large European conglomerates. Instead of maintaining a host of different divisions, the trend is to focus on obtaining market leading positions in key areas and to sell non-core interests, often to financial bidders. Danone is set to concentrate on dairy products, biscuits and water. Low margin businesses such as groceries have been sold. Earlier this year Riboud said: “We decided to refocus on products where we have leading positions with the greatest potential.” A sales memorandum has been sent to several private equity groups. CSFB declined to comment on the state of the sale. However, one venture capitalist said: “The market for glassware is in long-term decline so it did not appeal to us. But there are lots of other funds out there looking to invest so they will probably find a buyer from somewhere.”