France's Danone SA on Friday, Dec. 12, scotched expectations that it will offload its medical nutrition business, declaring that the unit was part of its long-term growth strategy.
"Each of our core businesses – Fresh Dairy Products, Waters, Early Life Nutrition and Medical Nutrition – has a role to play in living up to our mission and achieving the profitable, sustainable growth that is an integral part of our strategy," Danone's CEO Emmanuel Faber said in a statement.
The comments came a day after Danone's board met to ponder offers of about €3 billion ($3.7 billion) for the medical nutrition operation, which produces food for people on special diets for medical reasons.
The unit had attracted indicative offers from Lake Forest, Ill.-based Hospira Inc. and a consortium led by Germany's Fresenius SE & Co. KGaA that included Permira and PAI Partners SAS, a source with knowledge of the situation said on Thursday. Danone also held talks with Nestlé SA, though the Swiss food giant is understood not to have made an offer.
Danone has also been reported to be pondering the sale of its stake in Japan's Yakult Honsha Co., the maker of a yoghurt-based health drink.
The Paris-based company had been considering the future of the medical nutrition business since February, when it tapped JPMorgan & Co. to sound out interest. Analysts had speculated that cash from a sale could be used to make a bid for Glenview, Ill.-based Mead Johnson Nutrition Co.
Danone on Friday did not comment directly on its M&A strategy but said that it would seek to "expand capacity rapidly and build development platforms in fast growing regions, particularly Asia and Africa." Spending on growth has increased Danone's debt and could lead to a downgrading of the company's credit rating, the company warned.
Danone said it was on target to hit its 2014 sales objective of 4.5% growth and deliver free cash flow of between €1.3 billion and €1.4 billion. The company also appointed Cécile Cabanis as CFO. She will replace Pierre-André Térisse, who will move to become vice president of a newly created Africa division, from Feb. 20.
Shares in Danone traded Friday at €54.51, down €0.89, or 1.6%, on their Thursday close.