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Saturday 18 November 2017

France's Danone to sells US dairy business for €769m

Dominique Vidalon

French food group Danone has agreed to sell its USdairy business Stonyfield to Lactalis for $875m (€769m), a move designed to address competition concerns stemming from its acquisition of US organic food group WhiteWave.

Danone said on Monday that Stonyfield had around $370m in turnover in 2016, and that the sale price represented a multiple of around 20 times the 2016 earnings before interest, tax, depreciation and amortization (EBITDA) for Stonyfield.

Danone shares were up 1pc in mid-session trading, in line with a similar rise on the CAC-40 index of French blue chips stocks.

"The sale price appears reasonable and we expect proceeds would reduce leverage largely offsetting dilution from the disposal," Liberum analysts wrote in a research note.

"Danone remains on track to deliver 10pc five-year CAGR (compound annual growth rate) driven in part by WhiteWave and significant savings from the €1 billion Project Protein efficiency program," they added.

Danone's 'Project Protein' savings program, unveiled earlier this year, aims to cut costs by €1 billion over the next three years.

Jefferies analysts added that the Stonyfield sale was "a decent exit and the removal of a potential distraction for Danone."

Earlier this year, Danone had said it would sell Stonyfield as part of an agreement with US authorities to facilitate its takeover of WhiteWave.

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The deal is expected to be completed in the third quarter of 2017.

Reuters





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