Blog: Chris Brook-CarterDoes Danone have diplomatic immunity?

Chris Brook-Carter | 22 July 2005

If press reports are to believed, we could finally know today if Pepsi’s designs on the French food and drink behemoth Danone are for real or just the product of over-eager journalists looking for the next big scoop.

The Pepsi board is believed to be meeting today to decide on a course of action and there certainly is enough substance to these rumours to have worried even French President Jaques Chirac.

He is the latest high-profile political figure to wade into this crisis of French pride, saying he was "vigilant" and "mobilised" against a foreign takeover.

That French feelings are running so high is hardly surprising. Danone is a huge symbol of French business success, and the fact that the predator is one of America’s most visible brands will not be helping, given the recent political antipathy between the two nations.

However, Danone is a public company that operates happily on the free market when it is not being targeted for takeover. That its CEO and board are so animated about defending Danone’s independence is quite right if they feel that is in the best interests of their shareholders.

But the involvement of France’s political elite is misplaced. A company that operates in the free market and takes all the benefits that a public-listing bring, cannot then claim diplomatic protection when that same system then works against it.

International politics should have no place in business dealings such as these and if Monsieur Chirac et al successfully block a Pepsi bid for Danone, it will set a dangerous precedent.


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