Brooke Sutherland is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Danone's $12.5 billion purchase of WhiteWave is earning cheers from shareholders on both sides of the deal. Mead Johnson investors are less excited.

Many of them were hoping Danone's next big deal of choice would be a takeover of the $16.5 billion baby-formula producer. Speculation of such a transaction has been percolating for the better part of the past four years, ever since Danone lost out to Nestle in the contest for Pfizer's infant-nutrition business. And there was good reason to believe the timing was finally right in 2016 as Mead Johnson got cheaper and worked out some of its setbacks in China.

It wasn't to be. So Mead Johnson shares kicked off  Thursday morning by sliding more than 3 percent in early training. 

Top o' the Morning To You
Mead Johnson shares took a tumble in early trading
Source: Bloomberg

The big draw of Mead Johnson is its 12 percent share of the Asian baby-food market -- the fastest-growing category in a region that's already likely to expand faster than the rest of the world, according to Euromonitor. But Danone seems to have decided a different growth trend in food -- one of an organic and gluten-free nature -- is a better bet to stake its cash on.

Piece of the Action
A deal for Mead Johnson would have given Danone a bigger slice of the Asia Pacific baby-food market -- but the yogurt maker went a different direction
Source: Euromonitor, Bloomberg Intelligence

Mead Johnson does have other potential suitors, the most obvious of which is Nestle. But the food giant already has a large slice of the Asian baby-food market and may bump up against antitrust issues there, as well as in Latin America and the U.S. Plus, Nestle could soon have its hands full if it decides to go after Hershey. Mondelez made the first move, but Nestle has a trump card in its option to reclaim Hershey's U.S. license for the KitKat brand (and the $3 billion in value that goes along with it) if someone else buys the company.

It's highly unlikely Danone would plop down the kind of change a Mead Johnson takeover would require any time soon after splurging on its most expensive big acquisition yet with WhiteWave. The only real hope for Mead Johnson shareholders is that some other food company beats out Danone's bid for WhiteWave and puts the yogurt maker back on the deal hunt. There are already rumblings about a possible counterbid, with WhiteWave having been speculated in the past as a target for slower-growing packaged-food companies such as General Mills and Campbell Soup. But Danone seems committed to seeing the deal through.

And that leaves Mead Johnson holders without much to look forward to. As of Wednesday, the stock was trading above what analysts think it should be worth on a fundamental basis over the next year. If investors were pricing in the possibility of a frothy takeover bid, they may need to lower their expectations. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Brooke Sutherland in New York at

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