Eurazeo exits French dairy

The French manager has converted €700m of bonds it issued in 2009 to Danone equity, allowing it to divest the dairy group it started backing 25 years ago.

Paris-listed Eurazeo has shed its interest in French dairy giant Danone, in a move deemed to positively impact its 2013 net income by €131 million. 

Eurazeo first became a shareholder in Danone 25 years ago, a period over which the group’s revenues grew from €5.7 billion to nearly €20 billion. 

In 2009, the firm issued around 15.5 million in bonds exchangeable for Danone shares, worth a total of €700 million. The proceeds, generated at a time when Danone’s share price was sagging, were used to finance fresh investments. The bonds were due to mature in 2014. 

Having received early conversion requests from investors, Eurazeo has decided to exercise its option to exchange the entirety of these bonds against equity this Wednesday – a move underpinned by Danone’s strong market performance over the past few weeks. 

This allows Eurazeo to clear the €700 million of debt relating to the converted securities, as well as eliminate the corresponding interest payment for 2013 and 2014. It estimates that the early bond redemption will boost its net cash position to €600 million, with consolidated debt standing at €3.3 billion. 

The firm, which manages €11.74 million worth of assets, finances most of its investments through its balance sheet. It posted positive interim results last month, with NAV growing 16 percent between 31 December 2012 and 11 March 2013.