Danone to sell Stonyfield to complete WhiteWave acquisition

By Jim Cornall

- Last updated on GMT

Danone is hoping the acquisition of WhiteWave will move quickly after its announcement to sell Stonyfield.
Danone is hoping the acquisition of WhiteWave will move quickly after its announcement to sell Stonyfield.

Related tags North america Danone

Danone has reached an agreement in principle with the Antitrust Division of the United States Department of Justice (DOJ) as it looks to close the acquisition of WhiteWave.

As part of the agreement in principle, Danone said it will sell one of its US dairy subsidiaries, Stonyfield, in the months following the closing of the acquisition of WhiteWave.

This move is expected to permit closing to occur shortly and will allow the company to proceed with the integration of WhiteWave.

Danone said while Stonyfield has been “a valued part of Danone’s portfolio and remains a highly attractive asset,” its divestiture does not impact the strategic rationale or financial benefits of the WhiteWave acquisition.

Stonyfield, which is based in New Hampshire, generated approximately $370m in turnover in 2016.

Benefits of WhiteWave takeover

Emmanuel Faber, CEO of Danone, said the sale of Stonyfield addresses the DOJ’s concerns and enables Danone to quickly complete the WhiteWave acquisition that was announced last July.

“WhiteWave is expected to accelerate Danone’s 2020 profitable growth journey, drive strong value creation and deliver attractive financial benefits, including an above 10% EPS accretion based on run-rate synergies,”​ Faber said.

“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.”

Commitment to Stonyfield

Danone said the deal will double the size of its North America business to more than $6bn in turnover, allowing the company to become a Top 15 Food & Beverage company in the US and the number one in refrigerated dairy (excluding cheese).

Faber said Danone is committed to finding the right partner to support Stonyfield’s growth journey in the future. 

Euromonitor International statistics

According to market research provider, Euromonitor International, Danone is the largest health and wellness yogurt manufacturer globally, with 24% of the market, and is the second largest organic-dairy based yogurt player globally and in North America with 6.4% and 13.3% of the market, respectively.

Stonyfield is the second largest brand for organic dairy based yogurt in North America, with 13.3% of the market. Although its brand shares decreased in 2016, the brand registered 3.5% value sales growth in 2015-2016.

The top organic dairy brand, with 40.8% of the market in North America, is Olympic, produced by Ultima Foods Ltd. After Stonyfield in third is Organic Meadow, at 10.8%.

Ultima also tops the North American companies list, with 40.8% market share.    

Globally, French company Triballat-Noyal SAS is the top organic dairy company, with a 6.7% market share. After Danone globally come Arla Foods, followed by Italy’s Granlatte Società Cooperativa Agricola and PZ Cussons Plc.

Danone focusing on core brands

Euromonitor notes that sales of organic dairy based yogurt in North America are set to increase with a CAGR of 5.7%, to reach $61.5m by 2021.

In a report published in November 2016, Euromonitor International senior analyst Hope Lee said health, wellness and nutrition is Danone’s core product development focus.

Like other leading international health and wellness manufacturers, Danone aims to build global share by focusing on its core brands.

“Danone uses both organic and acquisitive strategies to develop its HW business. Danone put considerable R&D efforts into the nutritional benefit of yogurt and channel resources to develop, market and promote the superiority of yogurt for business expansion,”​ Lee said.

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