La Ronde

France's Perrier company has built an empire on water. Besides selling half of the roughly 2.5 billion bottles of mineral water that Frenchmen drink every year, it has the national franchise for Pepsi-Cola and is one of the largest makers of chocolate and other candy in France. Annual sales are $204 million. But when Perrier tried to expand its gastronomic conglomerate by growing big in the dairy industry, the ensuing spectacle resembled the script for a French farce:

Act I. Perrier desires Genvrain, the largest company in France's inefficient and fragmented dairy industry. The French government heartily approves Perrier's bid, which would both foil any foreign attempt to take over Genvrain and represent a major move toward consolidating France's 3,000 scattered dairy firms. Finance Minister Valery Giscard d'Estaing indicates as much in a meeting with the publicity-shy strategist of Perrier's expansion, President Gustave Leven. Perrier makes a generous proposal for Genvrain: $56 a share for stock that was selling for $45 on the Bourse. Genvrain would be mate No. 2 for Perrier. It has already wooed and almost won Sapiem, France's second largest dairy firm.

Act II. Suddenly, Perrier itself is attacked. Mysterious buyers corner 10% of its shares. On the theory of "Cherchez Petranger," suspicion immediately falls on Unilever, the Anglo-Dutch giant whose own bid for Sapiem has been rejected after the French government persuaded Sapiem to resist any foreign liaisons. Unilever emphatically denies raiding Perrier, and so do other potential foreign rivals, notably Switzerland's Nestle and the U.S.'s KraftCo, which are also reputed to have eyes on France's dairy industry.

Act III. Enter Bel, France's largest cheese company, which may or may not have been behind the attack on Perrier to blunt its bid for Genvrain. Bel and Genvrain merge, and announce their combining as a fait accompli.

Act IV. The state-run Credit Agricole bank, acting as an interested go-between, buys up most of the Genvrain shares that had been offered to Perrier, and resells them in equal amounts to Perrier and Bel. Then, in a burst of amiability, the principals agree to share Genvrain. The agreement serves the government's purpose of keeping France's dairy industry free from foreign control, but represents rather less than a major gain for efficiency. The terms of the formula, originally proposed by the Ministry of Agriculture, were divulged last week: Perrier and Bel will each own at least 25.5% of Genvrain, and the Credit Agricole will own 15%, with all sharing operating control. It is an arrangement that the French might call a menage `a quatre.

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