Maker of baby food bids for Numico

PARIS — Groupe Danone SA, the maker of Dannon yogurt and Evian waters, is strengthening its baby food business with a bid Monday to buy Royal Numico NV for $16.8 billion.

The addition of Numico would make Danone one of the world's largest players in the fast-growing $24 billion baby food industry, which experts expect to grow 25 percent by 2010.

"With this project, we are designing a new Groupe Danone, enhancing dramatically its growth profile and its growth potential for years to come," Danone CEO Franck Riboud said in a statement.

Groupe Danone is offering 55 euros ($75) per share, which is a 44 percent premium over the average share price over the last three months, according to a joint statement by the two companies.

Netherlands-based Numico, the maker of the Olvarit, Bambix and Nutrilon baby food brands and clinical nutrition products, said its board would recommend that shareholders accept Danone's offer. In 2005, Numico was the world's third-largest seller of baby food, controlling a nearly 10 percent stake in the world market, according to data from Euromonitor International. That year, Danone ranked eighth.

Danone makes baby food under the Danette brand name. Danone and Numico expect "agreement can be reached" and will hold a joint news conference this afternoon.

Numico said Monday it will seek to withdraw its shares from trading "as soon as possible," providing Danone's offer is declared unconditional. Shareholders will be able to vote on the deal in an extraordinary meeting mid-September when the terms and conditions will be published. A settlement date is expected in early October.

Numico has seen particularly strong growth in Eastern Europe and Asia. The company posted a net profit of 202 million euros ($265 million) in 2006, while sales rose 32 percent to 2.64 billion euros ($3.47 billion).

Numico CEO Jan Bennink said the offer was "a very attractive proposition for all of our stakeholders." The bid is not expected to lead to job losses, both companies said.

Bennink said during a conference call that he plans to step down after the deal is completed.

"Numico holders can get a very nice price for their shares, which are already expensive," SNS Securities analyst Richard Withagen told Dow Jones Newswires. He added that he can't think of any party that would top the offer.