French Food Group Danone Bids £8.3bn for Dutch Rival

French food group Danone last night launched a €12.3bn (£8.3bn) takeover bid for Dutch rival Numico, makers of baby foods such as Cow & Gate and Milupa.

The all-cash offer of €55 a share, a 44% premium to Numico's average closing price over the past three months, comes in the immediate wake of Danone's sale of its biscuits business to US rival Kraft last week. That deal is worth €5.3bn - far more than the €4bn forecast.

The widely expected offer, recommended by the executive and supervisory boards of Numico, will make baby foods and clinical nutrition Danone's second-biggest business after bottled water. It produces Evian and Volvic and, like other foods groups, is expanding its range of healthy products.

The combined business will be renamed Blédina but Numico will continue to be headquartered in Schiphol, close to Amsterdam airport, and both groups said there would be no "significant negative" consequences on employment.

Franck Riboud, Danone chief executive, said: "the combination of the two groups will create a unique food company - the one with the clearest and most powerful health positioning in the world. With this project, we are creating a new Groupe Danone, enhancing its growth profile and potential for years to come."

Jan Bennink, Numico chief executive, said: "I am confident that a combination with Danone and the position within the enlarged Danone group will ensure its continued growth momentum for the future. This deal is a very attractive proposition for all of our stakeholders, including our employees and shareholders."

Mr Bennink is credited by friends with turning around the Dutch company, which also owns baby foods brands such as Nutricia and Olvarit, in the past five years, in effect saving it from going under. The offer, expected to be concluded within weeks according to both boards, represents a multiple of 21.6 times projected earnings this year.

He said he would step down when the deal was closed. "Once you have been CEO it's quite hard not to be CEO ... Two captains on the same ship is probably not ideal so we have come to an agreement that on the deal's closure I will probably step down."