Danone asks Suntory to buy water operations

Danone has approached Japan's Suntory Holdings about potential purchase of the French food giant's mineral water business, which includes Evian and Volvic, a report said Friday. Suntory is believed to be keen on the idea and is likely to start negotiating with Danone as early as next month after examining the details of the proposal, the Nikkei business daily said, without disclosing its sources. A Suntory spokeswoman declined to discuss the report, saying: "At this point, there is no ongoing negotiation." Privately-owned Suntory is trying to expand overseas, mainly in Asia, and appears favorably disposed to deal with Danone, which has an extensive sales network around the world, the Nikkei said. But it could be difficult for the firms to reach the final deal due to the huge size of the potential transaction, the Nikkei said. Danone hopes to sell its entire mineral water business, but it could consider a deal to sell only its Asian operations because its global water business may be too expensive to sell all at once, the newspaper said. Major Japanese beverage makers have aggressively sought to expand abroad to offset the shrinking Japanese market. Suntory in 2009 bought Europe's privately held Orangina Schweppes Group for about $3.3 billion, in what was the year's largest purchase by a Japanese company of a foreign firm.