The French markets regulator, AMF, said yesterday that PepsiCo confirmed that no takeover project is currently being considered and that Groupe Danone has taken note of their statement.
On July 20, after Danone shares rose nearly 20 per cent on speculation that PepsiCo would make a bid, Prime Minister Dominique de Villepin and other political leaders vowed to block any foreign takeover.
Jean-Louis Borloo, the French employment minister, reacted to the speculation by calling Danone a 'national jewel', and saying that the government would stop at nothing to defend 'France's interests'.
The government controls 3 per cent of Danone and can count on the support of employee pension funds and French institutional investors, which own 43 per cent of the French food giant.
PepsiCo officials declined to comment on the political unrest but the company was forced to issue a denial on July 6 contradicting a news report that it had already acquired three per cent of Danone's stock.
Even if the US Company was to gain control, it would more than certainly face a backlash from French consumers, who buy a quarter of Danone's products.
The news prompted heavy selling of Danone shares but political opposition in France seems likely to have thwarted any idea of foreign interest in Groupe Danone, the $16.5 billion French bottled water, yoghurt and biscuits group.
Groupe Danone is the world's largest dairy products maker and the second largest bottled water producer. PepsiCo makes Fritos chips and other snack foods in addition to its core soft drinks business.
In a research note, analysts at Dryden Financial stated that Danone's bottled water and yoghurt businesses would have offered PepsiCo a high growth segment to its business, as the yoghurts segment is in one of the fastest-growing businesses in the dairy sector.