As we always say, while carrying out online stock trading one must look out for mergers and acquisitions since they can make insignificant companies more powerful and influential in their field. It can raise their stock value and put them on the road to greater profitability and sustainability. It also provides them exposure to new markets. One such mega deal happened a few weeks ago in the dairy and organic food sector.
The Danone - WhiteWave Deal
Danone’s purchase of WhiteWave (NYSE: WWAV) has made the news, since it would ensure that the already big diary manufacturer, with a host of brands in its arsenal, will grow even bigger and grab an enviably large chunk of the dairy and organic foods market. The $10.4 billion deal values WhiteWave at $56.25 per share, which is over 18% more than the price at which the company’s shares closed on the day before the announcement of the acquisition, at $47.43.
The total enterprise value of the deal is approximately $12.5 billion, considering all WhiteWave liabilities. This means that Danone (NASDAQOTH: DANOY) is willing to pay quite a significant amount for a WhiteWave deal since the latter company only had a $168 million net profit in 2015 on sales under $4 billion. But Danone might have found WhiteWave more valuable than any other prospective acquirer would, since both the companies have complimentary product lines that do not overlap as well.
Factors Influencing the Deal
Danone is a European-based company with global sales, while WhiteWave is primarily focused on the United States. The deal could improve Danone’s growth profile and enhance its presence in North America while giving greater global exposure to WhiteWave. It would also ensure a profitable and sustainable growth for both companies, which they hope to attain by 2020.
Brexit could partly have been responsible for this deal since large businesses would want to increase their operation and exposure in a more stable environment, which isn’t quite the case in Europe with Britain’s exit from the European Union looming. It is significant that this deal is the first multi-billion-dollar deal carried out in Europe following the UK referendum which resulted in the majority voting for exiting the EU.
The deal has been approved unanimously by the boards of directors of both the companies. Danone believes the purchase would close as the year ends, pending regulatory approvals and conditions, and WhiteWave’s shareholders approving it. WhiteWave CEO Gregg Engles tweeted that Danone fits in culturally quite well with WhiteWave, and both companies have aspirations to foster healthy eating in the world.
Stock market experts will be looking out for deals like this, and TradeZero has the expertise and experience to provide you with the right solutions for successful online stock trading. Give us a call at +1 954-944-3885 or feel free to send us an email at email@example.com.
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