Catching the WhiteWave

The maker of soymilk and organic salad has the growth profile food acquirers need.

Down to Earth

WhiteWave's stock tripled from the time it was spun off from Dean Foods in 2012 through Aug. 5, 2015, outpacing much of the packaged-food industry. Since then, it's dipped.

Source: Bloomberg

WhiteWave Foods' impressive three-year rally has ended, and now, what was one of the best-performing U.S. food stocks the last few years has dropped almost 30 percent from its all-time high in August. But investors may be overlooking something.

I'm not talking about the fact that analysts project WhiteWave's revenue will grow 50 percent faster than the average U.S. foodmaker. Or that the majority recommend buying the shares at these levels. 

The $6.8 billion maker of Silk almond milk and Earthbound Farm organic salad has drawn the attention of Douglas Braunstein and James Woolery, a pair of quasi-activists who also happen to be former JPMorgan Chase dealmakers. WhiteWave, in fact, is the biggest target of the fund they run, Hudson Executive Capital LP. I call them quasi-activists because their modus operandi doesn't involve contentious (and expensive) proxy battles or publicly skewering management teams the way activist hedge funds often do. 1  Basically, these guys will place nice. 

Representatives from WhiteWave have already met with Hudson to hear its ideas, which include a possible sale of the company, a person familiar with the matter told Bloomberg's Ed Hammond and Matthew Monks. Read their piece about the fund here

It's surprising that WhiteWave hasn't been acquired yet. With household names like General Mills and Kellogg plagued by slowing growth and the consumer shift to better-for-you foods, WhiteWave is in the sweet spot

Growth Gap

WhiteWave's sales are projected to exceed those of other large U.S. packaged-food makers over the next few years.

Source: Bloomberg, analysts' estimates

While the traditional food giants haven't made many large acquisitions during the past decade, they've started showing an interest in deals as the need builds.

Hungry for Deals

The record food M&A last year was supported by the $55 billion Kraft Heinz merger. But buyers are also increasingly looking for targets in the organic and better-for-you segment of the food market, which would involve smaller transactions like WhiteWave.

Source: Bloomberg

General Mills, the $33 billion maker of Cheerios, acquired Annie's Inc. in 2014 for about $810 million, swallowing up the company after its organic macaroni and cheese and bunny-shaped crackers had made their way from natural-foods retailers to the shelves of  mainstream grocery chains. It was General Mills' biggest purchase since buying the Yoplait yogurt business in 2011. And just a couple of weeks ago, Pinnacle Foods, which makes some well-known but tired brands, completed its $975 million takeover of Boulder Brands. The deal adds Boulder's Evol gluten-free, antibiotic-free, frozen tacos and burritos and Earth Balance vegan snacks to Pinnacle's roster of Mrs. Butterworth's pancake syrup and Hungry-Man frozen fried chicken dinners. 

WhiteWave itself has been active on the deal front, with some small but smart transactions. It acquired the So Delicious dairy-free milk and frozen treats business for $195 million in 2014. And then last year, WhiteWave bought Sequel Naturals, the maker of Vega plant-based nutrition products, for $550 million, as well as Wallaby Yogurt for $125 million. 

While WhiteWave may aspire to build itself into a major, independent food company and leader in the healthy food space, it still looks ripe for bids. And with an activist in the picture, a takeover could be more likely than ever.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
  1. Well, not so much lately. This piece explains

To contact the author of this story:
Tara Lachapelle in New York at

To contact the editor responsible for this story:
Beth Williams at

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