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Wimm-Bill-Dann Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Is there anything tastier than Russian kefir? Not according to PepsiCo (NYSE: PEP  ) , which anted up $3.8 billion to buy a majority stake in local kefir kingpin Wimm-Bill-Dann (NYSE: WBD  ) this morning -- sending Wimm's shares soaring 27%.

So what: Pepsi's been dueling with Coca-Cola (NYSE: KO  ) for control of the Russian drinks market for years. The companies have mainly been nailing down the juice market, and Wimm's got a hand in that, and water as well. But now Pepsi's leashed the big dog of Russian and Ukrainian dairy, the biggest name in milk, yogurt, and kefir.

Now what: Following its offer to buy 66% of Wimm, Pepsi will invite all other shareholders to tender their shares at the offer price -- about $33 per ADR. Therefore, if you missed out on the initial share price lurch, there's probably only about another 5% of profits to be had here, and only if the Russian Anti-Monopoly Committee approves the sale. There's always the possibility a bidding war will break out, but so far, Coke and Pepsi have avoided stepping on each other's toes in Russia. Dr Pepper Snapple (NYSE: DPS  ) has shown little interest in the country. Lifeway Foods (NYSE: LWAY  ) is too small to compete, Dean Foods (NYSE: DF  ) too poor, and Danone turned up its nose at the chance to buy Wimm six years ago for a 1 times sales valuation. It would look quite the fool (lower-case "f") if it turned around now and raised its bid price past Pepsi's offered 2.2 times sales.

Basically, if you didn't own Wimm-Bill-Dann before today, there's little reason to do so now.

Want to watch how this all plays out? Add Wimm-Bill-Dann to your watchlist.

Fool contributor Rich Smith does not have any position in any company named above. The Motley Fool has a disclosure policy.

Coca-Cola is a Motley Fool Inside Value pick. Coca-Cola and PepsiCo are Motley Fool Income Investor recommendations. Motley Fool Options has recommended a diagonal call position on PepsiCo. The Fool owns shares of Coca-Cola. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


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  • Report this Comment On December 02, 2010, at 8:29 PM, rd80 wrote:

    Glad to see the Fed's QE2 program is working - for Russia.

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Rich Smith
TMFDitty

As a defense writer for The Motley Fool, I focus on defense and aerospace stocks. My job? Every day of the week, I'm monitoring the news, figuring out the winners and losers, and tracking down the promising companies for you to invest in. Follow me on Twitter or Facebook for the most important developments in defense & aerospace, and other great stories.

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