Business Notes Takeovers

Nestle outfought Italy's Agnelli family last week in a trans-European bidding battle over Source Perrier of France -- but the victory may get the Swiss food giant into, well, hot water. Suspecting a violation of European Community competition rules, the E.C. Mergers Task Force in Brussels has opened an investigation into the $2.7 billion takeover.

The Task Force believes the acquisition of Perrier, the world's leading brand of mineral water, with 20% of the market, gives Nestle half of all bottled-water sales in France. Perrier also owns Poland Spring, Great Bear and Arrowhead in the U.S. The panel will also look into a possible duopoly created by Nestle's sale of Volvic, one of Perrier's still-water brands, to France's leading food group, BSN. Should it uncover violations, Brussels will probably seek redress by forcing Nestle to sell off some assets rather than annulling the deal, a punishment the E.C. has carried out only once before.

Though the Agnellis pocketed a $475 million profit for their controlling stake in Perrier, the family's hopes of making a splash in the lucrative mineral-water market were thwarted. Overall sales for waters such as Perrier and Evian, the worldwide leaders in the mineral and still-water categories respectively, are growing almost 10% annually -- faster than any other product in the food-and-drink industry.