• by Thom Forbes  @tforbes, July 7, 2016

The French foods group Danone is buying WhiteWave Foods Co., the Denver, Colo.-based maker of organic, plant-based foods and beverages whose brands include Silk soy and almond milk, Horizon Organic, So Delicious Dairy Free and Earthbound Farm Organic salads at a deal valued at $12.5 billion, including debt.

“By adding WhiteWave's organic dairy portfolio, Danone will shoot to a leading position in the U.S. refrigerated dairy market and will become one of the top 15 largest U.S. food and beverage manufacturers in terms of sales,” Brian Sozzi reports for TheStreet. “Following the closing of the transaction, Danone's North America footprint would increase to 22% from about 12% of its total portfolio.” 

The first bullet-point of the release announcing the agreement early this morning claims it’s “a perfect match of vision, culture and businesses.” The all-cash transaction of $56.25 per share represents a premium of approximately 24% over WhiteWave’s 30-day average closing trading price of $45.43.

The deal, which comes 18 months after Emmanuel Faber took the CEO reins, is Danone’s largest acquisition in a decade and boosts its upmarket product line, Nick Kostov points out in the Wall Street Journal. It will “make Danone the global leader in fresh dairy and health-food brands,” reports Bloomberg’s Thomas Mulier, “… as consumers increasingly shun processed foods perceived as unhealthy.”

The deal has been approved by the boards of both companies and is expected to close by the end of the year, Reuters reports. It will be 100% debt financed.

“At Danone, we constantly seek to align our vision of the world, our mission and our businesses: we believe we have a special responsibility, as expressed in our Manifesto, to help and support people in adopting healthier and more sustainable eating and drinking practices and constantly evolve our portfolio of brands and products to achieve this objective,” says Danone’s Faber in a statement. 

Pointing out that “demand for more healthy fare has transformed the U.S. food industry, forcing older companies to slash costs, reformulate recipes and invest in smaller, faster-growing companies with offerings better suited to today’s American consumer,” the Financial Times’ Arash Massoudi, James Fontanella-Khan and Lindsay Whipp write that WhiteWave “has long been considered a potential takeover target for rivals such as Campbell Soup, Kellogg Company and General Mills.”

WhiteWave’s sales “will increase about 11% this year, based on the average of analyst estimates, after doubling since 2010 on rising demand for more healthful beverages and food, data compiled by Bloomberg show,” Mulier writes. “North America accounted for 86%  of the company’s $3.9 billion in revenue last year, with Europe contributing the rest, according to data compiled by Bloomberg.” 

“Packaged food is under pressure but what you’re getting is this high-end food product which is not in the discount end of the market,” Kepler Cheuvreux analyst Jon Cox tells Kostov. “That market is growing very quickly in North America and globally.”

“WhiteWave has one of the strongest portfolios in our coverage and should continue to grow sales at a mid- to high single-digit rate and EPS in the mid-teens over the long-term driven by burgeoning health and wellness trends,” Bernstein analyst Alexia Howard said in a note in May cited by the FT.

“Danone’s history goes back to yoghurt and milk-based products but modern consumers prefer non-milk products in their diets,” points outForbes contributor Marcel Michelson. “As such, the French group embraces new market trends while tapping higher-margin market segments.”

“WhiteWave CEO Gregg Engles said the deal will be good for his company's shareholders and represents a smart merger. He will join Danone's board,” Chris Woodyard reports for USA Today.

“Danone is a unique company with distinctive capabilities that will enable WhiteWave to reach its next phase of growth,” Engles says in the joint release. “Danone is a great cultural fit for our organization and I am excited for our employees.”

Mais oui — particularly if they currently own WhiteWave shares. And Danone shares were up more than 6% in early trading, the WSJ’s Kostov reports.