Danone has continued to pursue its development strategy on the North American home and office delivery market, where it has already achieved a co-leading position. The French food and drinks giant has agreed to buy the Canadian company Sparkling Spring Water Holdings.

Financial details were not available but reports suggest the deal is worth between US$300m to US$400m.

Sparkling Spring Water Holdings is a significant player in the office-delivery and home-delivery water market, a sector that is lower profile than the branded bottled water market, but which is becoming increasingly important in the water market.

Danone said Sparkling Spring is the second-largest company in its sector in Canada, and is the market leader in the Pacific North West region of the US. It is ranked third-largest in the UK and the Netherlands.

The Canadian company has annual revenue of more than $101.1m, and owns 210,000 water coolers, Danone said.

Danone is already Canada's leading operator in the sector. In October the French group, through its Quebec subsidiary, Labrador Laurentiennes, acquired Patrimoine des Eaux du Quebec, the number three player in the Canadian home and office delivery (HOD) market.

The acquisition is being as a significant move by Danone to protect its position in the water market, in the face of increasing competition from soft drink giants Coke and Pepsi, neither of which have entered the home and office delivery segement yet.

Home and office delivery of water, while growing only 2.5% in 2001 in the US in volume, offers profit margins as high as 60%, according to industry experts.

Completion of the deal is subject to regulatory approval.