The French government has blocked the sale of Orangina, owned by French drinks manufacturer Pernod-Ricard, to US soft drinks giant Coca-Cola Co. The announcement, which ended Coca-Cola's 2 1/2-year struggle for Orangina, triggered an angry reaction from Pernod and sent its shares tumbling on the Paris stock market.
Pernod Ricard owns Irish Distillers and Jameson*SDA Irish whiskey is one of the group's core worldwide brands. The veto of the sale, which would have given Pernod €700 million, puts a major question mark over Pernod's ambitions to expand through acquisition. Pernod has most recently been linked with a possible bid for the British drinks group Allied Domecq.
Pernod-Ricard director general Mr Thierry Jacquillat said in a statement: "This decision blocks its [Orangina's] legitimate ambitions and considerable development possibilities on the global market, to the detriment of our national economy."
However, an analyst told Reuters he did not believe the collapse of the deal would seriously undermine Pernod shares.
Mr Graham Eadie at Deutsche Morgan Grenfell, said he believed Pernod - which said it would work on a new strategy - would still try to sell Orangina, possibly to PepsiCo Inc, which has a smaller share of the French market than Coca-Cola, or to a local operator.
Pepsi, which had voiced fears that the sale of Orangina to Coca-Cola would squeeze it out of the French market, was not immediately available for comment.
Pernod shares, which were trading off 0.33 per cent at €60.33 on the Paris bourse just before the government decision was made public, immediately plunged. The stock was down 5.57 per cent at €57.60 at 1352 GMT, while the French blue chip CAC-40 index was up 0.56 per cent.
Coca-Cola revised its bid for Orangina after the French authorities rejected a five billion French franc offer in September 1998 on the grounds the deal would give the joint company a dominant position in the market for soft fizzy drinks sold in cafes, restaurants and hotels.
Orangina has annual sales of FFr200 million in this non-domestic sector, on total turnover of FFr1.2 billion. Finance and Industry Minister Mr Christian Sautter and Farm Minister Mr Jean Glavany said Coca-Cola offered to give Pernod's wholly owned Pampryl subsidiary a 10-year exclusive licence to market Orangina in the non-domestic sector, but France's competition watchdog had decided the proposal was inadequate.
"The competition council . . . considered that these commitments could lead to co-ordinated behaviour between Coca-Cola and the licence-holder and therefore undermine fair competition, and that the advantages of the operation in terms of economic progress were not sufficient to compensate for the distortion of competition," the ministers said.
