Yakult shares surge on Danone stake, SARS rumour
Reuters , 04.07.03, 2:15 AM ET
TOKYO, April 7 (Reuters) - Shares in Yakult Honsha Co Ltd <2267.T> extended gains on Monday on speculation that French food group Danone <DANO.PA>, which has raised its stake in the Japanese drink maker, may seek business ties or an even bigger share.
The shares also got a boost from a rumour that a sweet milk-like drink produced by Yakult has a preventative effect against the deadly Severe Acute Respiratory Syndrome (SARS) virus, traders said.
Shares in Yakult ended trade up 10.27 percent at 1,869 yen, after touching a 9-½ year high of 1,898.
They have risen 18 percent since Danone, a world leader in its core water, dairy and biscuit businesses, said on Thursday that it had increased its stake in Yakult to 19 percent from five, as it seeks growth in external markets.
"The news prompted a buying spree as investors think Danone may seek to increase its stake in Yakult even further or seek some sort of business alliance in overseas business," said Shuichi Shibanuma, senior analyst at Credit Swiss First Boston.
"Yakult is a typical example of Japanese companies that have strong product lineups and high growth potential, but are run poorly, in terms of corporate governance, as it is led by the founder family."
Shibanuma added that any collaboration with a foreign company like Danone would help improve Yakult's profitability and the way the company is run.
A company spokesman said that in Hong Kong, daily sales of its mainstay "Yakult" probiotic drink had spiked to 900,000 bottles a day on March 31, compared with average sales of 300,000 to 400,000.
Traders cited talk that the drink can stave off the SARS virus. "There's no evidence that Yakult can prevent SARS, but a rumour has spread like wildfire throughout Hong Kong and many shops have been out of stock (there)," the spokesman said.
Sales of the drink in Hong Kong represent less than two percent of total sales of the drink, and sales have not been boosted in Japan, he said.