French dairy giant Danone has sold its US-based Horizon Organic and Wallaby units to local investment business Platinum Equity for an undisclosed fee.
The Alpro and Activia brands owner said the disposal is part of its Renew Danone turnaround strategy, announced in March 2022. The strategy includes the disposal of what CEO Antoine de Saint-Affrique described at the time as “under-performers”.
Announcing the deal today (2 January). Danone said the organic dairy units represented approximately 3% of its global revenues. The company will retain a minority stake in the business.
De Saint-Affrique said: “As part of our Renew Danone strategy, we committed to a portfolio review and asset rotation for businesses that fell outside our priority growth areas of focus to drive value creation.
“Today marks an important milestone in delivering this commitment, while giving the Horizon Organic and Wallaby businesses the opportunity to thrive under new leadership.
“This sale, once completed, will allow us to concentrate further on our current portfolio of strong, health-focused brands and reinvest in our growth priorities.”
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Just Food has asked California-based Platinum Equity for its comments on the deal, outside of US office hours.
The sale of the Colorado-based organic units, which produces milk, yogurt, creamers, butter and cheese, was first mooted this time last year with Danone saying they had a “dilutive” effect on sales growth and were under strategic review.
De Saint-Affrique said at the time: “Both Horizon Organic and Wallaby are strong, much-loved brands with compelling growth opportunities. That said, seen through the lens of our renew strategy, which requires us to stay disciplined in how we allocate our resources, they fall outside our priority growth areas of focus.”
Danone inherited the Horizon Organic unit when it acquired US group WhiteWave Foods for $12.5bn in July 2016, a deal that doubled its size in the US market.
In October, Danone upped its 2023 revenue guidance, claiming the Renew turnaround strategy is bearing fruit.
It said it expected like-for-like sales growth to reach 6-7% this year, compared to a previous estimate of 4-6%.
De Saint-Affrique said at the time: “Eighteen months after the launch of Renew Danone, the benefits of our strategy are starting to show. This quarter is the seventh consecutive quarter of delivery, with sales up 6.2% on a like-for-like basis.”
The 6.2% rise in third-quarter like-for-like sales saw Danone post three-month revenue of €6.9bn (then $7.3bn). Analyst consensus had predicted a 4.7% increase.
In December, Danone revealed it was in talks to sell its French baked goods business Michel et Augustin to “Ferrero-related” Belgian holding company CTH Invest.