Danone nears $10bn deal for health-focused WhiteWave Foods
Danone the world’s biggest yoghurt maker, is nearing an agreement to acquire WhiteWave Foods, the natural and health-focused food group, in a deal that is expected to value the US company at about $10bn.
A deal could be announced as early as Thursday, according to two people informed about the talks. It would be the French group’s largest acquisition in a decade and the first big transaction by Emmanuel Faber, the company veteran who took over as Danone chief executive in late 2014.
Those informed about the deal cautioned that the timing of an announcement could slip and that the transaction was still being finalised.
A Danone takeover of WhiteWave Foods would add an array of upmarket grocery store products such as milk brand Horizon Organic and Silk, the plant-based soya milk label.
Shares in WhiteWave Foods closed at $47.43 on Wednesday, giving it a market value of $8.34bn. Applying a typical deal premium of 30 per cent, the value of a takeover would be in excess of $10.5bn.
WhiteWave Foods, which is backed by investors and former JPMorgan dealmakers Douglas Braunstein and James Woolery of Hudson Executive Capital, has enjoyed strong sales growth in recent years, as it has focused on offering lucrative organic and health products including almond- and other nut-based beverages.
The Denver, Colorado-based company has long been considered a potential takeover target for rivals such as Campbell Soup, Kellogg Company and General Mills.
The company has forecast solid organic sales growth this fiscal year that would be among the strongest in the industry.
“WhiteWave has one of the strongest portfolios in our coverage and should continue to grow sales at a mid- to high single-digit rate and EPS in the mid-teens over the long-term driven by burgeoning health and wellness trends,” said Alexia Howard, an analyst at Bernstein in a note in May.
Emmanuel Faber, Danone CEO: on the alert for blind spots
3 March 2016 – Paris, France Danone CEO Emmanuel Faber poses for portraits at the Danone HQ in Central Paris.
The head of the French foodmaker says the discipline of rock climbing improves his judgment
Demand for more healthy fare has transformed the US food industry, forcing older companies to slash costs, reformulate recipes and invest in smaller, faster-growing companies with offerings better suited to today’s American consumer.
Some bigger companies such as Kellogg are investing in venture capital funds as a way to access innovative developments in food.
Danone, once the darling of growth investors, has struggled in recent years to drive growth, grappling with headwinds in emerging markets as well as in Europe due to volatile economic conditions.
However, since Mr Faber took the helm the group has managed to better ride out external economic factors.
It recently raised its 2016 guidance, projecting a full-year margin expansion of 50-60 basis points.
Neither Danone and nor WhiteWave Foods immediately responded to a request for comment.