Danone’s acquisition of WhiteWave Foods will be accompanied by liquidation of its subsidiary Stonyfield. This will be in accordance with the antitrust laws of the U.S. Department of Justice. The French company, also known as Dannon in the U.S., had last year acquired WhiteWave Foods for an estimated $10 billion.
Commenting on the sale of the world’s largest organic yogurt brand, Danone, in a press release said Stonyfield will remain a prized asset and its “divesture does not impact the strategic rationale or financial benefits of the WhiteWave acquisition. The global yogurt market continues to be highly lucrative; according to a report by research firm Future Market Insights, global yogurt sales were worth $87 billion in 2016, and are expected to increase at 10% CAGR in the next decade. Demand for organic yogurt is particularly high, owing to its ‘health and wellness’ benefits.
It is widely agreed that the decision to sell Stonyfield is based on an agreement between Dannon and the U.S. Department of Justice’s antitrust department. Analysts are valuing Stonyfield between $800 million to $900 million, with Dean Foods and General Mills among the suitors.
General Mills, for long, has been aiming to boost its natural and organic foods division. Analysts are speculating that Stonyfield will be a good fit for the group’s portfolio and can help it in achieving its 2019 target of $1 billion in natural and organic product sales. General Mills may also take into account the fact that its yogurt division has continuously lost market share to Chobani and other brands. Currently, General Mills owns Yoplait, while it has also recently started offering organic brands under its brand names Annie’s and Liberte.
A key factor that can fetch higher price for Stonyfield is its single-ownership. Dannone first bought a 40% stake in the company in 2001, increasing it to 80% in 2004. The company had complete ownership of the brand by 2014. On account of this, selling off Stonyfield is expected to be a far-less complicated affair for Danone.
In the absence of antitrust regulations, it would have been a different story with Danone, after its acquisition of WhiteWave, enjoying a monopoly. However, as Danone works on making the acquisition a smoother process, it is willing to give up on its subsidiary.