WhiteWave Foods Swells 5% on Earthbound Farm Buyout

Shares of WhiteWave Foods (NYSE: WWAV  ) swelled a little higher in Monday trading, after the Dallas, Tex.-based specialist in plant-based foods and beverages announced it's buying organic foods company Earthbound Farm.

WhiteWave announced the acquisition early Monday, saying it will pay about $600 million cash to acquire Earthbound from its current owners, Kainos Capital and company founders Drew & Myra Goodman. WhiteWave calls Earthbound "the largest organic produce brand in North America, and the recognized leader in the value-added organic packaged salad category." Earthbound also produces organic fresh fruits and vegetables, frozen fruits and vegetables, and dried fruits and snacks.

WhiteWave thinks the purchase will nicely complement its own portfolio of well-known brands such as Silk soy, almond, and coconut milks, Horizon Organic milk, International Delight creamers, and LAND O LAKES butter. CEO Gregg Engles pointed out that fresh foods, such as Earthbound produces, "are one of the most attractive, emerging trends in the food industry today."

The purchase is expected to close in Q1 of 2014, and to add $0.07 per share in adjusted profit for that year. WhiteWave is making the purchase at a valuation of roughly 1.2 times sales, a significant discount to the 1.5x sales valuation that its own shares command, which helps to explain investors' enthusiasm for the deal.

Shares of WhiteWave Foods closed up 5.2% after the announcement was made, at $22.92 per share.


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