Perrier Extends Market Pullback; Inquiry Starts

The French company Source Perrier said today it was withdrawing its mineral water from all world markets because of the discovery of contamination by a toxic solvent, and the French stock exchange’s watchdog body launched an inquiry into possible insider trading in Perrier shares.

Chairman Gustave Leven made the announcement of further recalls of the mineral water at a news conference in Paris after a health scare over traces of benzene in Perrier in North America spread to Western Europe.

All stocks of Perrier had already been withdrawn in the United States, Canada, Japan, Denmark, the Netherlands and West Germany.

Perrier shares dropped sharply on the Paris stock exchange before the announcement.

The regulatory commission COB said today that it will investigate trading patterns in Source Perrier stock on the MONEP options market last Friday, the day before the firm disclosed that it was withdrawing supplies of the sparkling water across North America.

Traders said there had been unusually heavy buying of Perrier “put,” or sale, options before the announcement, with 300 options traded in one day instead of the usual 50.

“The people who sold on Friday knew Perrier was going to have problems,” one trader commented.

Others said the surge in sale-option prices that followed the company’s announcement would have allowed operators to turn up to $1 million in profits.

Perrier shares, which were quoted at $297 at close Friday, had fallen 9% to $235 by early afternoon today.

Perrier believes that a cleaner used to de-grease bottling lines at its plant in Vergeze in southern France could have caused the contamination but it says the Vergeze spring itself remains pristine.