Danone, the French food multinational, intends to make an agreed €12.3 billion cash bid for Royal Numico, the Dutch maker of Cow & Gate and Olvarit baby food.

Danone and Numico issued a joint statement yesterday announcing that they had struck a preliminary agreement that is expected to lead to a €55-a-share cash offer.

They said a definitive offer agreement was expected "over the next weeks".

The valuation represented a 44 per cent premium over the average Numico closing price over the past three months, the companies said.

Numico shares had risen more than 11 per cent to 44.50 yesterday before the Netherlands Authority for Financial Markets stepped in to halt trading.

Danone has been reshaping its product portfolio to reflect the growing consumer focus on healthy eating and nutrition. Last week it announced it was planning to sell its biscuits division to Kraft Foods for €5.3 billion.

The disposal would have involved Danone slimming down to just two divisions: a mineral water arm featuring Evian and Volvic, and a dairy business that includes the Activia yoghurt brand.

However, analysts saw the disposal as a precursor to an acquisition by Danone.

Numico - which also makes specialised foods for clinical nutrition - was seen as a particularly likely target because Danone already had a baby food brand called Bledina housed within its dairy division. Some members of the Numico management team also have prior links to Danone.

Franck Riboud, Danone's chairman and chief executive, said that the deal would create "the world's purest health and nutrition company".

Jan Bennink, Numico chief executive, and Jan-Marc Huët, its chief financial officer, will both step down if it goes through.

The two companies said that Numico would be run as a separate division within the enlarged group, ensuring that Danone kept a three-legged structure after all. - (Financial Times service)