Danone SA (ADR) (OTCMKTS:DANOY) is planning to sell U.S. dairy business Stonyfield for $875 million.
Danone says that it will be selling Stonyfield to Lactalis, which is the largest dairy enterprise in the world. The selling price of $875 for Stonyfield is 20 times more than its EBITDA that was reported in 2016. The company also reported a turnover of $370 million for the 2016 year.
Danone is selling Stonyfield to Lactalis as part of an agreement with the U.S. Department of Justice in connection to its recent acquisition of WhiteWave, a packaged food and beverage company. The deal will need final approval before it can be completed. This includes confirmation from the U.S. Department of Justice. The sale of Stonyfield to Lactalis is expected to close during the third quarter of the year.
“The sale price appears reasonable and we expect proceeds would reduce leverage largely offsetting dilution from the disposal,” Liberum analysts said in a research note obtained by the New York Daily News. “Danone remains on track to deliver 10 percent 5-year CAGR (compound annual growth rate) driven in part by WhiteWave and significant savings from the 1 billion euros Project Protein efficiency program.”
Danone’s deal to acquire WhiteWave had it spending $10 billion on the company. DANOY says that it expects the deal to include EBIT synergies of $300 million by 2020. It also resulted in WhiteWave CEO Gregg Engles joining the company’s Board of Directors.
Danone stock was up slightly as of Monday morning and is up 20% year-to-date.
As of this writing, William White did not hold a position in any of the aforementioned securities.
