A malicious and false email announcing that a substance in the peanut-based snack "Bamba" caused a recent spate of mysterious infant deaths has caused the stocks of the product's manufacturer Osem to plummet.

According to the email, which the Health Ministry has denied as false, Osem was to issue a press release Wednesday night announcing that a correlation has been found between Bamba and the deaths.

The Health Ministry emphasized that "there is no connection between the unusual mortality and any kind of food product." Osem also issued a response, saying "we refer the public to the Health Ministry announcement that quashes the baseless rumors."

In less than three days, the email was sent to tens of thousands of people, and was featured in numerous internet forums. The content of the email was also disseminated by SMS and word of mouth.

In parallel, company workers entered various parenting and childcare forums online, clearly identifying themselves as belonging to Osem's customer-service department, and reassuring surfers that Bamba was safe.

At least some damage had already been done. The e-mail sent Osem stock spiraling south, falling as much as 6% before rallying to close only 1% lower, on enormous turnover ¬ for Osem - of NIS 27 million.

A few hours after the affair erupted, Osem's spokeswoman confirmed that the company will be filing a complaint with the police Thursday morning, asking that the source of the email be investigated.

The request may not be needed, as the source has already been outed - a woman working at Hewlett-Packard.

She disseminated the mail among all HP workers in Israel, who number in the hundreds, writing that by evening Osem would be issuing a press release recalling Bamba, and saying that Super-Pharm was going to remove the product from its shelves.

She even signed the e-mail using her own name and added her phone number, giving the police a blessedly short investigation.

In an exchange of email between her and another HP worker who asked for more details on the affair, the woman wrote that her uncle works at Super-Pharm and had told her the story.

The woman could not be reached for comment.

It was evident that Osem's management had been caught off guard and wasn't sure how to counter the attack, especially since the enemy was not a corporate competitor, but just an ordinary person who had caused tremendous damage with the click of a mouse.

"Osem will take legal steps against the person who sent this malicious e-mail," the company commented, noting the panic that the lie had sparked.

A source at the Health Ministry said that from afternoon, the ministry had been inundated with phone calls from frightened consumers, demanding confirmation or denial of the report.

"We underestimated the intensity of this fabrication," commented a manager at Osem. "We didn't think that so many people would take an e-mail that stupid seriously. I don't want to think what would have happened if [we] had been a small company that didn't have mechanisms to reach people at the Health Ministry quickly, asking them to issue an announcement denying the mail."

Osem is controlled by the Swiss food company Nestle.