Analyst sees WhiteWave as a fit for General Mills

by Keith Nunes
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NEW YORK — Alexia Howard, an analyst with Sanford C. Bernstein & Co., L.L.C., sees the soon-to-be spun-off WhiteWave Foods Co. as an acquisition target for General Mills, Inc.

In a note published May 2, Ms. Howard outlined the strength of the WhiteWave Foods product portfolio, specifically its Horizon Organic, Silk, International Delight and Alpro brands, and noted that WhiteWave has achieved a 10% compound annual growth rate over the past three years and a 20% C.A.G.R. for earnings before interest and taxes growth.

“Such credentials could make it (WhiteWave Foods) an attractive target for General Mills, in our view,” she wrote. “General Mills’ U.S. yogurt business is currently struggling under pressure from more successful Greek yogurt brands and is also familiar with soy beverages given its experience with 8th Continent soy milk.”

Ms. Howard added that it is possible other food and beverage companies may express an interest in WhiteWave Foods, “unless valuation multiples rise to the lofty levels seen by other health-and-wellness oriented companies.”

Neither WhiteWave Foods nor General Mills have commented on Ms. Howard’s research note.

Dean Foods announced on May 1 its plans to spin-off a portion of its equity interest in WhiteWave Foods on May 23. Following the spin-off, Dean Foods will hold a 19.9% equity stake in the company, but plans to dispose of it over the following 18 months.

On May 8, WhiteWave Foods’ stock price closed at $17.64 per share. During the most recent 52-week period the company’s stock has traded in a range of $14.22 to $19.17.

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