Danone Sells Off Stonyfield Yogurt for $875 Million to Protect WhiteWave Acquisition

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Danone Sells Off Stonyfield for $875 Million

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Danone has agreed to sell Stonyfield, the world’s largest organic yogurt brand, to French Lactalis for $875 million. The sale is being made in order to address concerns linked to Danone's acquisition of WhiteWave Foods; the organic company will add competing dairy product lines to Danone's offerings, including Horizon organic milk and Wallaby organic yogurt.

The decision to sell the brand was first announced in March in accordance with the Antitrust Division of the United States Department of Justice and is expected to be completed by the third quarter of this year, Reuters reports. The sale of Stonyfield will "help tie a bow" on the French company's acquisition of WhiteWave Foods, reports CNN.

Lactalis was originally competing with Chinese Yili's $850 million offer for the acquisition of Stonyfield. The final purchase price represents a premium 20 times higher than Stonyfield's 2016 Earnings Before Interest, Taxes, Depreciation, and Amortization. Stonyfield has had around $370 million in turnover in 2016, Danone said Monday.

"The sale price appears reasonable and we expect proceeds would reduce leverage largely offsetting dilution from the disposal," Liberum analysts wrote in a research note.

Danone will be paying more than $10 billion to purchase WhiteWave, which reported a net profit of $168 million on revenue of $3.9 billion in 2015.

When the acquisition of WhiteWave was first announced, organic watchdog group, the Cornucopia Institute, raised concerns, noting that the deal “could have reduced options and raised prices for consumers without any positive impact on the quality of the products they are buying.”

Aside from its dairy lines, WhiteWave also brings brands such as Silk nondairy milks and Earthbound Farm packaged salads to the French company's offerings.

“The purchase will allow us to double the size of our U.S. business and become the world leader in organic,” Danone Chief Executive Emmanuel Faber told Bloomberg. “I am convinced Danone is uniquely positioned to continue WhiteWave’s development.”

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