Blog: Dean BestDanone's move for WhiteWave Foods under fire

Dean Best | 12 August 2016

Announced last month, it is one of the more notable M&A deals in the international food sector of 2016. But an organic advocacy group in the US has taken aim at Danone's planned US$12.5bn takeover of WhiteWave Foods.

The Cornucopia Institute, an organic industry watchdog group, has filed a complaint with the Department of Justice and the Federal Trade Commission and launched a petition calling for federal regulators to investigate the proposed merger.

Cornucopia claimed the deal, which Danone and WhiteWave expect to complete by the end of the year, would give the French giant a larger share of the US organic dairy market than a company has controlled before. The transaction would see Danone, the owner of organic brand Stonyfield, take on Horizon, the largest organic milk brand in the US and organic yogurt brand Wallaby.

"With this acquisition, we are concerned that Danone will easily be able to beat out any competition by lowering prices beyond what farmstead dairies, and more moderate size milk processors and marketers, can withstand," Marie Burcham, a livestock policy analyst and attorney with The Cornucopia Institute, said.

When Danone announced its half-year results late last month, the company's CFO, Cecile Cabanis, said "everything is moving according to plan so far". This Tuesday (9 August), WhiteWave, issuing its own first-half numbers, said the deal is "expected to close by the end of the year, subject to the approval of WhiteWave’s shareholders, regulatory approvals and customary conditions".

A day later, The Cornucopia Institute announced its objections.

Danone and WhiteWave have yet to respond to requests for comment. At the time of writing, the Department of Justice and the Federal Trade Commission had also not replied to questions.

It is hard to say what will come of The Cornucopia Institute's complaint. The DoJ and the FTC will at least look at it, although it would be a surprise if the watchdog's petition led to the deal being blocked, if only because Danone and WhiteWave would surely have had highly-paid lawyers looking at the potential ramifications of the transaction.

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