French dairy giant Danone has entered into an agreement to acquire WhiteWave Foods in a deal that values the Alpro maker at US$12.5bn and doubles Danone’s size in the US market.
Danone and WhiteWave this morning (7 July) revealed that the companies have entered into a definitive merger agreement that will see Danone pay $56.25 per share for the company. WhiteWave shares closed at $47.43 in New York yesterday and Danone said the offer represents a premium of approximately 24% over WhiteWave’s average 30-day price of $45.43.
Danone said it expects the transaction to be “solidly accretive” to earnings within the first year after closing and to deliver “above 10% accretion” based on expected run-rate synergies thereafter. The transaction is expected to result in approximately $300m of EBIT synergies by 2020, the company noted.
The deal will be 100% debt financed, Danone revealed.
WhiteWave generated sales of $4bn in 2015 and the company operates a stable of brands in North America and Europe that operate in the high growth natural and organic sectors. Since WhiteWave went public in 2012, it has seen a compound annual growth rate of 19%. Its categories span premium organic dairy, plant-based dairy alternatives, fresh foods and coffee creamers and scale brands include Silk, So Delicious, Vega, Alpro, Provamel and Horizon Organic.
Announcing the agreement, the companies said it was a “perfect match of vision, culture and business”. Danone CEO Emmanuel Faber said that the alliance would progress Danone’s aim of supporting “healthier and more sustainable” eating habits as well as advancing the group’s 2020 strategy to generate sustainable and profitable growth.
“We found in WhiteWave the perfect alliance as we both believe in a healthier future and are conscious of our power to lead society forward,” Faber commented. “This unique combination positions us better to address tomorrow’s consumer trends and represents a great opportunity to step change the ambition of our plan for an Alimentation revolution and to accelerate our path towards strong sustainable and profitable growth by 2020.”
Faber also stressed that the deal will extend Danone’s footprint in North America: “It will allow us to enhance Danone’s growth profile and reinforce our resilience through a broader platform in North America.”
Following the closing of the transaction, Danone’s North America footprint would increase from 12% to 22% of its total portfolio and Danone will become one of the leading players on the US fresh dairy shelf.
Danone chairman Franck Riboud added: “We believe WhiteWave’s size, positioning and geographical footprint fit perfectly with Danone’s strategy and that it is the right transaction at the right time.”
Riboud said that the company is also proposing that Greg Engles, WhiteWave chairman and CEO, be appointed to the Danone board of directors.
Engles said that the acquisition provided WhiteWave shareholders with value and stressed that the tie-up with Danone would enable WhiteWave to reach “its next phase of growth”. Upon completion, the companies said WhiteWave will be able to leverage its position as part of a larger global company with “substantial financial, geographic and operational resources”.
Danone intends to integrate its North American operations with those of WhiteWave which, when the deal closes, will operate as a Public Benefit Corporation.