Antoine D'Estaing, Danone's chief financial office, told the Wall Street Journal the group was looking for small to medium businesses in new, emerging markets. The company, he said, was ready to spend between €500m and €1bn.
More acquisitions in emerging markets could help Danone to fight back against Nestlé Waters, which this year overtook Danone to become the world's biggest bottled water firm.
Danone itself has been plagued by rumours that other multinationals, PepsiCo and Kraft Foods, were preparing takeover bids for it.
Danone always denied the rumours, and French government ministers last summer vowed to defend the dairy, water and biscuits group from any takeover, calling it a 'national treasure'.
Danone chairman Franck Riboud said Danone could hold its own without government help. "Sanctuaries are for relics," he said.
The group, which owns top brands such as Evian bottled water, Activia yoghurt and Lu biscuits, recently announced a nine per cent like-for-like sales rise for the first half of 2006.
Success was largely driven by high double-digit growth across emerging markets in Asia, Eastern Europe and Latin America; which persuaded Danone to raise its forecast for full-year sales growth from seven to eight per cent.
Growth in these markets was spurred on by new product launches in the health and functional food categories. In beverages these included the 'V' functional drink launched in Argentina and the Nutri-Express smoothie in China.
France has remained the trouble spot for Danone, although d'Eastaing said new products, such as mini Evian bottles and a functional tea drink under the Taillefine brand, were starting to pay off.