Danone Said to Near WhiteWave Purchase at $10 Billion Value

(Bloomberg) -- Danone is nearing an agreement to buy WhiteWave Foods Co., in a deal that could value the maker of Silk brand soy milk at about $10 billion, according to a person with knowledge of the matter.

The purchase could be announced as soon as Thursday, the person said, asking not to be identified because the information is private.

WhiteWave's acquisition give would Danone, the global leader in fresh dairy, health-food brands including Horizon milk, Wallaby Organic yogurt and Earthbound Farm packaged salads as consumers increasingly scrutinize labels and shun processed foods. Paris-based Danone is targeting sales growth of more than 5 percent by 2020, with half of its business keying in on consumers seeking healthy-eating alternatives.

Danone needs its dairy sales to grow at least 3 percent to meet its targets, said Bloomberg Intelligence analyst Duncan Fox in a report last month. “Danone SA has struggled to deliver consistent sales and margin growth as a result of lower commodity prices, particularly within the dairy business," he wrote.

Innovation Challenge

Growing dairy revenue may be a challenge for the company, with dairy volume falling as prices rose, said Fox. The company will be re-launching its Activia probiotic dairy products this year. Danone brands also include Oikos Greek-style yogurt and Evian water. The French company's revenue rose 6 percent last year to 22.4 billion euros ($24.8 billion), with more than half come from emerging economies.

Talks may still falter, or an announcement could be delayed, the person said.

A Shanghai-based spokesman for Danone said he couldn't immediately comment, while a representative for WhiteWave didn't immediately respond to phone calls and e-mails outside regular business hours in Denver, Colorado. The Financial Times reported the talks earlier, citing unidentified people.

To read Bloomberg Intelligence report on Danone, click here.

WhiteWave sales will grow about 11 percent 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. The bulk of WhiteWave's $3.9 billion in revenue last year came from North America, which accounted for 86 percent of revenue last year, with Europe contributing another 14 percent, according to data compiled by Bloomberg.

WhiteWave's Silk is the biggest-selling soy milk brand in the U.S., where
consumers are shifting to plant-based alternatives to dairy. The company has
itself used acquisitions to grow, buying rival soy milk producer So Delicious
and Earthbound Farms organic produce in 2014. Last year, WhiteWave acquired
plant-based nutrition products maker Vega and Wallaby organic yogurts.

WhiteWave shares have jumped 22 percent this year to close at $47.43 in New York trading Wednesday. Danone has increased 1.7 percent this year.

--With assistance from Craig Giammona and Daniela Wei To contact the reporter on this story: Ed Hammond in New York at ehammond12@bloomberg.net. To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Ben Scent at bscent@bloomberg.net, K. Oanh Ha, Dave McCombs