France's Danone to buy WhiteWave to boost U.S. business

Thu Jul 7, 2016 10:59am EDT
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By Dominique Vidalon and Michel Rose

PARIS (Reuters) - France's Danone said on Thursday it would double the size of its U.S. business by buying organic foods producer WhiteWave Foods Co for $10.4 billion in its largest acquisition since 2007.

The purchase will help Danone pursue affluent consumers by adding WhiteWave's popular health food offerings such as Silk almond milk, Earthbound Farm organic salad and Horizon organic milk to its lineup as it struggles in more challenging markets such as Brazil and Russia.

It is the first major transaction by Emmanuel Faber who took over as Danone's chief executive in 2014 and has vowed to return the group to "strong profitable and sustainable growth" by 2020.

Danone, known for its Activia and Actimel yoghurts, said it was offering $56.25 per share in cash, a 24 percent premium to WhiteWave's 30-day average closing price.

WhiteWave's shares rose as much as 19.8 percent to a record $56.82 and remained above the offer price, indicating investors could be expecting a higher bid for the fast-growing company.

"Given that the 24 percent premium is below the 30 percent premium that buyers typically offer in a take-out bid, we think additional bidders entering the fray is a possibility," Jefferies analyst Akshay Jagdale wrote in a client note.

Coca Cola Co, PepsiCo Inc, General Mills Inc, Campbell Soup Co and Kellogg Co have all been mentioned as possible suitors, D.A. Davidson & Co analyst Eric Gottlieb wrote.

WhiteWave has been seen as an attractive target since it was spun off from Dean Foods in 2012.   Continued...

Emmanuel Faber (L), Chief Executive Officer of Danone, and Gregg Engles, Chairman and Chief Executive Officer of WhiteWave Foods Company, pose before the start of a news conference in Paris, France, July 7, 2016. REUTERS/John Schults