Lactalis will acquire the Stonyfield organic yogurt business from Danone for $875 million.
The announcement, made this morning, brings to a close speculation about Stonyfield’s future. Danone announced that it would sell the company, one of its US dairy subsidiaries, in March to help expedite the $10.4 billion acquisition of WhiteWave Foods.
It is believed that the US Department of Justice (DOJ), which deals with anti-trust issues, had raised concerns about Danone’s future share of the premium, organic dairy market.
French-based Lactalis fought off competition from Yili, which last month emerged as the mostly likely suitor for Stonyfield, by beating the Chinese dairy’s $850 million offer. General Mills was also rumoured to be interested in adding to its existing Yoplait and Liberté business, but was put off by the inflated price attached to Stonyfield.
The $875 million valuation represents a premium 20 times higher than Stonyfield’s EBITDA in 2016.
The business, which produces a range of organic yogurts as well as smoothies, frozen yogurts and packaged milks, generated turnover in 2016 of approximately $370 million – all within the US. But Danone had previously said that its buyout of WhiteWave Foods would create pre-tax synergies of $300 million by 2020, prompting the decision to split off the Stonyfield business.
The move seriously boosts Lactalis’ operation in the Americas – roughly a fifth of the group’s overall business – and will presumably pave the way for Stonyfield’s products to be exported overseas.
Speaking at the time the deal was announced, Danone said that Stonyfield had been ‘a valued part of its portfolio’ and that it ‘remains a highly attractive asset’ despite its divestiture.
Danone chief executive officer Emmanuel Faber said: “As part of the agreement in principle with the Department of Justice (DOJ), we made the strategic decision to divest Stonyfield as it allows us to take a major step towards completing the WhiteWave transaction expeditiously.”
The transaction, reported by FoodBev in July 2016, will also improve Danone’s sales growth profile by between 0.5% and 1%.
“This is a good outcome as it addresses the DOJ’s concerns and enables Danone to shortly begin to capture the benefits of the combination, and the value creation announced last July.”
WhiteWave’s portfolio is focused on premium organic dairy, plant-based alternatives to milk and yogurt, fresh foods, and coffee creamers.
“WhiteWave is expected to accelerate Danone’s 2020 profitable growth journey, drive strong value creation and deliver attractive financial benefits, including an above 10% earnings per share accretion based on run-rate synergies. Through this perfect match, we will bring together complementary portfolios, including some of the fastest growing, health-focused categories that are strongly aligned with long term consumer trends.
“The combination will allow us to develop a world-leading dairy and plant-based food and beverage portfolio, with a full spectrum of better-for-you offerings, including protein-rich, organic, non-GMO and nutrient-dense choices.”
WhiteWave Foods, which reported full-year sales for 2016 of $4.2 billion earlier this month, will essentially double Danone’s turnover in North America. But analysts have pointed out that Stonyfield has achieved relatively slow growth in the last decade, making today’s move an easy swap.
In the past two years, Stonyfield has launched Oh My Yog! – a triple-layered fruit yogurt – followed by a line of 100% grass-fed yogurts and two additional whole milk offerings in May.
Last month, the brand announced plans to reduce the amount of sugar in its yogurt portfolio by a quarter during 2017.
Emmanuel Faber continued: “We are proud of all that we have accomplished together [with Stonyfield] and are committed to finding the right partner to support it growth journey in the future. In doing so we will attract more competition and capital into the US organic segment, creating an opportunity for it to grow even faster.”
© FoodBev Media Ltd 2018