Danone to Pay $12.5 Billion for Organic Milk, Vegan Drink Maker WhiteWave Foods
France's Danone (DANOY) said on Thursday it agreed to buy WhiteWave Foods (WWAV) for $12.5 billion, including debt, to double its U.S. business and expand in the fashionable area of vegan milk substitutes.
The takeover gives the buyer a company with annual sales of $4 billion. As well as dairy products, WhiteWave makes plant-based substitutes, with brands including Alpro, Provamel and Silk.
WhiteWave has long been seen as a target, and TheStreet's Ron Orol reported last month that activist fund Hudson Executive Capital was quietly accumulating a stake in the company.The report suggested Campbell Soup (CPB) - Get Report , Coca-Cola (KO) - Get Report , General Mills (GIS) - Get Report , Hershey (HSY) - Get Report , PepsiCo (PEP) - Get Report , and Nestle could be interested in the business, as well as Danone.
Danone is to offer $56.25 per share for WhiteWave, of Denver, Col.
That represents a premium of 18.6% to Wednesday's closing price for WhiteWave of $47.43. WhiteWave shares closed up 0.9% on Wednesday, though have slipped just over 4% on the year.
In a statement, WhiteWave CEO Emmanuel Faber said the "combination positions us better to address tomorrow's consumer trends."
WhiteWave chairman and CEO Gregg Engles called the deal "a compelling transaction that delivers significant cash value to our shareholders."
Danone expects the fusion to generate $300 million of run-rate Ebit synergies by 2020 and to increase earnings per share "solidly" in the first year after the transaction closes.
Danone closed Wednesday down 0.8% at €63.61 ($70.53). The stock has gained 13% in the past year.
Danone said it will finance the deal exclusively through debt, but added it expects to retain a strong investment grade rating.