It’s a match made in milk heaven: Danone, the French dairy giant behind brands like Activa, Oikos and Dannon yogurt, announced Thursday morning that it will buy Silk Soy Milk maker WhiteWave Foods in a deal worth $10 billion.
?Danone said Thursday that it will pay $56.25 per share to acquire WhiteWave, a price that marks a 24% premium to WhiteWave’s average closing price ($45.43) over the last 30 days. Including debt and other WhiteWave liabilities, the companies are valuing the deal at $12.5 billion. The deal is expected to close by the end of the year, pending all customary shareholder and regulatory approvals.
The acquisition is expected to be fully financed with debt. Danone said that it has received commitment from its banks for this debt, and that it expects to maintain a “strong” investment grade rating.
While the companies are calling the merger a “perfect match of vision, culture, and business,” the financial benefits are even more compelling: the acquisition will serve to almost double the size of Danone’s U.S. business, taking its North American footprint from 12% of Danone’s overall portfolio to 22%. Danone also said that merging with WhiteWave will make it one of the top 15 food and beverage producers in the U.S.
The companies are projecting $300 million in synergies by 2020, and Danone is saying that the merger will be accretive to its earnings within the first year of the deal’s closing.
Danone, despite being listed in France, has been relatively unaffected by the travails that have affected the majority of Eurozone shares this year. It is helped considerably by the fact that the vast majority of its revenue is sourced outside the EU and this acquisition brings its operations improved diversity. The result will be that about a third of revenues will come from the Americas, Asia and Europe respectively.
That places the company among the cream, no pun intended, of companies in the consumer staples sector with truly global operations. The share (Est P/E 21.1, DY 2.48%) which was breaking out last week pulled back on today’s news suggesting some additional digestion is required before a move to higher levels can be sustained.
PepsiCo also made headlines today with stronger US sales. The share continues to extend its breakout to new highs in what is still a consistent medium-term uptrend.
Elsewhere among the consmuer related Autonomies:
Coca Cola continues to consolidate in the region of the upper side of its three-year range.
Yum Brands continues to rally from the region of its 200-day MA.
McDonalds found at least near-term support in the region of the trend mean last week and a sustained move below $115 would be required to question medium-term uptrend consistency.
Unilever’s UK listing benefitted from the decline of the Pound and its Dutch listing is testing the upper side of a more than yearlong range.
Starbucks posted an upside weekly key reversal from the region of the February lows to challenge the MA. A sustained move above $60 would confirm a return to demand dominance beyond the short term.
Nike posted its largest reaction in more than five-years between the December peak and last week’s low before posting an upside weekly key reversal. A process of mean reversion is now underway but a sustained move above the trend mean will be required to signal a return to medium-term demand dominance.