Skip to main content

Ooh Danone – More than just yogurt

My previous blog was on the US corporation Google Inc. This time I'll be covering the French public limited company (Société Anonyme or S.A. in French) Danone S.A., a global food company. This is a pretty complex case study and I do not intend to do it full justice here. What follows is a summary of what I believe are key characteristics of Danone S.A.'s control and ownership structure. As it was the case for my previous blog, this case is built on the concepts discussed in Chapters 1-3 of "International Corporate Governance".

Danone S.A.'s most recent company report (or 'registration document') is available from here. You might need to click on '2013' to obtain the most recent available company report at the time of writing this blog. 

This might be obvious, but it is always a good idea to start by having a look at the table of contents. This should give you a fairly good idea where to find important information on control and ownership. Below I have highlighted in yellow what should be important sections in the company report (click on the picture to make it larger):

Let us start with Section 7.1 "Company's Share Capital". First of all, Danone S.A. has only one class of shares:

So, it is different from Google Inc. which has two classes of shares. But hey, as we are going to see this does not mean that this example is any easier than the previous one on Google Inc.! Let us now move to Section 7.6 "Voting Rights, Crossing of Thresholds". This is where things get interesting:

Danone S.A., as a lot of other French companies, confers multiple voting rights (double voting rights to be specific) to long-term shareholders who have registered their shares with the company and have owned the shares for at least two years. However, things are more complicated than that:

Danone S.A. also has a voting cap or limit of 6%. However, for shareholders who have double votes (see above) the limit is 12%. Nevertheless, this voting cap will become void if a single shareholder acquires more than two thirds of the company's shares as a result of a public tender offer:

There is more interesting information (such as the reasons for the voting cap) on this same page, but for the sake of brevity I shall skip it. Let us now have a look at Section 7.7 on the share ownership structure:

Danone S.A. does not have a majority shareholder or a shareholder with a blocking minority. This is typically the case of companies with a voting cap in place. Similar to Google Inc., there are differences between the percentages of votes and the percentages of cash flow rights individual shareholders hold. Some shareholders, such as Sofina & Henex group and the Danone employee fund, hold more votes than cash flow rights. Others, such as MFS group, hold fewer votes than cash flow rights. 

Returning to Chapter 3 of "International Corporate Governance", Danone S.A. would fit under combination C given its voting cap. However, it would also fit under combination D given the provision of conferring double voting rights in its articles of association. Nevertheless, the voting cap is the strongest of the two provisions. Hence, Danone S.A. does fit under combination C as control clearly lies with the management rather than a large shareholder. This means that the main potential conflict of interests for this company is between the management and the shareholders.

Legal disclaimer: This blog reflects my personal opinion and not necessarily that of my employer. Any links to external websites are provided for information only and I am neither responsible nor do I endorse any of the information provided by these websites. 


Popular posts from this blog


This module is intended for advanced undergraduates in business and management, accounting, finance, or economics, and Master students. The module is delivered over a total of 24 hours of lectures with a flexible format including traditional lectures, class discussions of the end-of-chapter questions in Goergen (2018) and the multiple choice questions (see below).  AIMS OF THE MODULE This module aims to introduce you to recent developments in the theory and practice of corporate governance. The module adopts an international perspective by comparing the main corporate governance systems across the world.  LEARNING OUTCOMES OF THE MODULE On completion of the module you should be able to: Evaluate the current state of corporate governance in an international context; describe differences in corporate control and managerial power across the world; assess the potential conflicts of interests that may arise in various corporate governance environments; critically evaluate the effectivene…
The private equity deals that fail to justify 'fast buck' strategiesBy Marc Goergen, Cardiff University; Geoffrey Wood, University of Warwick, and Noel O'Sullivan, Loughborough UniversityThere is an ongoing and very heated debate between the unconditional supporters of private equity and their opponents. It’s not hard to see why. On the surface, these investors can often buy fragile companies, load on debt to fund strategic change and sack workers in a bid for efficiency. It can look ruthless, but the industry claims it simply works.The British Private Equity & Venture Capital Association (BVCA), preach what they deem to be the undeniable benefits of private equity. For example, the trade lobby group wrote in 2010 that:Private equity investment has been demonstrated to contribute significantly to companies’ growth. Private equity backed companies outperform leading UK businesses.In contrast, Ed Miliband in his speech at the 2011 annual Labour Party conference accused p…