Political opposition in France is likely to thwart any foreign takeover of Groupe Danone (DA ), the $16.5 billion maker of Dannon yogurt and Evian bottled water. On July 20, after Danone shares rose nearly 20% in the previous week on speculation that PepsiCo (PEP ) would make a bid, Prime Minister Dominique de Villepin and other political leaders vowed to block any foreign takeover. The government controls 3% of Danone and can count on support from employee pension funds and French institutional investors, which own 43%. Pepsico officials declined to comment. Even if the U.S. company were to gain control, it might face a backlash from French consumers, who buy a quarter of Danone's products.

Edited by Michael S. Serrill

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