WhiteWave Foods (WWAV) to Be Acquired by Danone in $12.5B Deal

Shares of The WhiteWave Foods Company (WWAV) were trading up +8.93 or +18.83 percent to 56.36 per share after news broke early this morning that the company would be taken over  by French food company Danone SA in a transaction estimated at $12.5 billion. WhiteWave Foods closed at $47.43 per share, up +0.44 or +0.94 percent in Wednesday’s regular trading session.


Stock Analysis

Denver, Colorado based WhiteWave Food Company was originally a subsidiary of Dean Foods (DF) that was spun off and had its initial public offering in 2013.
The company specializes in food and beverages, premium dairy products, plant and silk based foods and beverages, as well as organic produce. The company’s best known brands are Horizon Organic, Earthbound Farm, Land O’Lakes, Provamel and International Delight. The company is active in North America and Europe and employs 3,800 people. WhiteWave had net income of $2.5 billion last year.

Paris, France based Danone SA was founded in Barcelona, Spain in 1919 as a small factory producing yogurt. The company is currently a French multinational food products company with four major divisions: Waters, Early Life Nutrition, Medical Nutrition and Fresh Dairy Products. The company has a presence in more than 130 markets worldwide and had revenue of €22.412 billion ($24.83 billion) in 2015 and has its stock listed on the Paris Euronext stock exchange under the symbol BN and ADRs on the OTCQX exchange as DANOY.

This morning, the two companies announced that they had entered into a definitive merger agreement in which Danone will acquire WhiteWave Foods Company for $56.25 per share in an all cash transaction. With the inclusion of WhiteWave’s debt and other liabilities, the total enterprise value of the transaction comes to approximately $12.5 billion.

The transaction, which was unanimously approved by the Board of Directors of both firms, and presents a premium of about +24 percent over WhiteWave’s stock’s 30-day average closing trading price of $45.43. The deal is still subject to the approval of WhiteWave shareholders, customary conditions and regulatory approvals and is expected to close by the end of the year.

Gregg Engles, WhiteWave’s Chairman and Chief Executive Officer said in this morning’s press release that,  “Danone is a unique company with distinctive capabilities that will enable WhiteWave to reach its next phase of growth. Danone is a great cultural fit for our organization and I am excited for our employees to benefit from the opportunities presented by joining Danone, a leading global food company and the ideal strategic partner to support our future. I am pleased to be joining Danone’s Board to assist with the exciting and unique journey combining our two companies.”

The two companies expect the merger to create a leader in the food industry “aligned with consumer trends for healthier and sustainable eating and drinking options,” such as organic foods and beverages, and non-GMO plant based alternatives to milk and yogurt. Danone expects the merger will help it build a stronger presence in North America increasing Danone’s footprint in North America from 12 percent to 22 percent of Danone’s total portfolio.

Danone expects the deal to be accretive to Danone’s earning in the first year after the close of the transaction and to be above ten percent accretion based on expected run rate synergies. Danone also expects the transaction to result in synergies of $300 million in earnings before interest and taxes by the year 2020.

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Published on Jul 7, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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