French yogurt giant Danone to buy WhiteWave for $10B

Danone, headquartered in Paris, will pay $56.25 a share – a 24 percent premium over WhiteWave’s 30-day average closing price of $45.43.

Danone (PARIS:BN.PA), the top yogurt maker on the planet, announced today that it intends on purchasing organic foods company WhiteWave Foods (NYSE:WWAV) in a transaction worth about $12.5 billion.

It was spun out of Dean Foods in 2013 and analysts have speculated that it could be a target for larger food companies.

“The purchase will allow us to double the size of our USA business and become the world leader in organic”, Danone Chief Executive Officer Emmanuel Faber said on a conference call with journalists.

Including debt and other liabilities, the value of the deal reaches $US12.5 billion. By building on its resources, scale, distinctive R&D and marketing capabilities, and route to market expertise especially in the chilled category, Danone will have significant opportunities to support WhiteWave’s continued growth while also realizing significant sales growth and cost synergies.

According to Lianne van den Bos, senior analyst, Euromonitor International, Danone’s acquisition of WhiteWave Foods is the latest example of big food companies going on a health drive as demand for healthy food continues to transform the food industry.

Shares of Danone are increasing 1.2% to $14.32 this afternoon. “Following the closing of the transaction, Danone’s North America footprint would increase to 22% from about 12% of its total portfolio”. The deal already has been unanimously approved by both companies’ boards of directors, although it still must be voted on by WhiteWave’s shareholders and receive regulatory approvals.

Bloomberg Intelligence analyst Duncan Fox wrote a report last month that said, “Danone SA has struggled to deliver consistent sales and margin growth as a result of lower commodity prices, particularly within the dairy business”. Its plant-based foods and beverages brands in Europe include Alpro® and Provamel®.

This transaction is a sign as well that multinational companies in Europe are shifting mergers and acquisitions emphasis over to North America following a number of years focusing on emerging markets.

Danone is the world’s largest yogurt maker, and owns major brands including Evian Water and Oikos Greek Yogurt.

By 0845 GMT, Danone shares were up 6 percent at 67.15 euros, leading gainers on the CAC-40 index of French blue chips as investors welcomed the deal despite the premium being paid.