French food group Danone said on Tuesday that it was not holding talks with U.S. paediatrics formula maker Mead Johnson and was not seeking any advice on the issue.
In response to current speculation in the media, Danone would like to state the following: No discussions are currently taking place between Danone and Mead Johnson,
Nor has Danone hired any advisor or bank to advise the company on this topic, the statement said.
Danone issued the statement after the Financial Times website's Alphavile section said Danone had brought in investment bank Lazard to work on a possible bid for Mead Johnson.
Alphaville said the deal was likely to cost Danone around $12 billion and would create the world's largest producer of baby milk formula.
Danone shares closed down 2.07 percent at 40.50 euros on Tuesday. Mead Johnson shares were up 5 percent before Danone's denial. They reduced their advance to trade up 0.62 percent after the Danone's statement.
An acquisition of Mead Johnson would broaden the geographic spread of Danone's baby food business, which is focused on western and eastern Europe, Alphaville had said.
One banker said that when Danone raised 3 billion euros in its first capital increase in 22 years in June, there was speculation about whether it was building a war chest.
If Danone moves now, it could be because they are taking advantage of a favourable environment for M&A, the banker had added.
(Additional reporting by Victoria Howley; Editing by Rupert Winchester)
(Reporting by Noelle Mennella, Dominique Vidalon)