Danone shares fell on Tuesday after the French food group unveiled its planned acquisition of Numico for 12.3 billion euros ($16.8 billion) - a high price for its Dutch rival, analysts said.
They pointed out Danone was paying a big premium for the strong growth of Europe's largest maker of baby food in a deal agreed on Monday, only days after the Paris-based group had agreed to sell its biscuits to U.S.-based Kraft Foods .
"We consider that Danone overpaid. We consider the deal to be very expensive, dilutive and risky," said analyst Andrew Wood at Bernstein Research.
Broker Merrill Lynch said in a note, "In our opinion, this is a very full and value destructive price." Fellow broker UBS described the all-cash deal as Danone Chief Executive Franck Riboud's "biggest bet so far."
Danone shares were down 3.2 percent at 58.28 euros at close.
Numico shares rose 20.7 percent to 53.70 euros, close to the Danone offer price of 55 euros a share in cash.
Bernstein's Wood said on his estimates the deal was priced at 23.1 times Numico's forecast EBITDA (earnings before interest, tax, depreciation and amortisation), and is the most expensive large-cap deal in the global consumer industry, outstripping Reckitt Benckiser's 20.9 times EBITDA acquisition of Boots' non-prescription drug unit in 2006.
He said it was above average recent food deals at 15.2 times and even the 15.7 times Nestle paid for Gerber baby food from Novartis earlier this year.
Shares in other food companies also rose after the Danone-Numico deal, with Nestle up 1.7 percent at 480.50 Swiss francs and Unilever up 1.9 percent at 16.55 pounds.
Danone is due to hold a press conference at 1:30pm London time.