Stonyfield Yogurt Put on the Block in Danone's Quest for WhiteWave Deal--Update

By Nick Kostov 

Stonyfield, the organic yogurt company, is up for sale.

France's Danone SA said it has agreed to divest the U.S. business to clear the biggest antitrust hurdle in its proposed $10.4-billion purchase of WhiteWave Foods.

The agreement in principle with the Justice Department--which had concerns about concentration in the dairy sector after the WhiteWave deal--could speed closing of that transaction, Danone said.

The company plans to sell Stonyfield in the months after the WhiteWave acquisition is completed, Danone said. Analysts say the firm could fetch between $800 million and $900 million dollars, including debt.

Chief Executive Emmanuel Faber said selling Stonyfield would help Danone conclude the WhiteWave deal fast. "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 [with WhiteWave]," Mr. Faber said.

Founded in 1983, Stonyfield, which was one of the pioneers in tapping consumers' growing desire for simpler, more natural products, has grown to have yearly revenue of around $370 million last year. Danone purchased a 40% stake in the company in 2001, and raised its share to 80% in 2004, strengthened its position in the U.S. against Minneapolis-based competitor General Mills Inc., maker of Yoplait yogurt. Since 2014, Danone has fully owned Stoneyfield.

Danone shouldn't find it hard to find potential buyers, said Natixis analyst Pierre Tegnér. Stonyfield could appeal to companies that want to increase their portfolio in the fast-growing organic segment. Stonyfield has been run as an independent entity and would therefore be simple to carve out from Danone, he said.

Danone and WhiteWave would together have big chunks of the yogurt market with brands including Dannon, Oikos, Actimel, Silk, Wallaby and Horizon Organic, hence speculation that the Justice Department was likely to ask Danone to divest part of its portfolio to ensure the deal got a regulatory green light.

Write to Nick Kostov at [e-mail]

(END) Dow Jones Newswires

March 31, 2017 07:24 ET (11:24 GMT)

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