Danone announces rights issue plan to raise euro3B

PARIS - Groupe Danone SA on Monday announced a rights issue aimed at raising some euro3 billion (US$4.2 billion) to boost the company's financial and strategic flexibility.

The offer to existing shareholders "in the near future" will be in the form of preferential subscription rights, a statement by Danone said.

Timing depends on both market conditions and internal approval of final terms and conditions, it added. The move also must be cleared by France's Financial Markets Authority.

Proceeds are to be used mainly to reduce Danone's net financial debt, which will allow it to increase financial and strategic flexibility in order to finance potential acquisitions, Danone's statement said.

Danone last month announced that first-quarter sales declined 2.3 percent due to reduced demand for yogurt and bottled water in a worsening economy.

In Monday's statement, Danone reiterated its full-year 2009 target, including growth of 10 percent in underlying earnings per share.

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