Dean Foods shares soar on WhiteWave IPO, profit beat

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

Top U.S. dairy company Dean Foods Co, which is spinning off a unit that sells Silk soy milk and Horizon Organic dairy products, posted a stronger-than-expected quarterly profit on broad-based growth and cost controls, and its shares soared 27 percent.

Dean announced plans on Tuesday to sell 20 percent of WhiteWave Foods Co, which will be comprised of Dean Foods' White Wave-Al pro segment, in an initial public offering. That division also sells International Delight coffee creamer products.

While Dean suggested last year it was looking at a possible spinoff of WhiteWave, the move comes earlier than expected as the company has been trying to reduce debt, said Erin Lash, an analyst at Morningstar.

"I think that there probably would be some favor ability toward unlocking some value at WhiteWave," Lash said. "It has more-value added offerings. It is faster growth, higher margin. I just didn't think it would happen quite this soon."

Dean plans to pay down its debt with proceeds from the offering, as well as $800 million to $925 million to be borrowed under a new credit facility at WhiteWave Foods.

At the time of the IPO, Dean Chairman and Chief Executive Gregg Engle will remain chairman of Dean, but also will take on the roles of chairman and CEO of WhiteWave. Gregg Tanner, president of Dean's fresh dairy business will be promoted to CEO of Dean.

Following the IPO, Dean will own at least 80 of White Wave's common stock. The company intends to distribute its remaining interest in WhiteWave to Dean shareholders in a tax-free distribution no earlier than 180 days following the closing of the IPO.

The company also said second-quarter net income attributable to Dean was $56 million, or 30 cents per share. A year earlier, it reported a loss of $51 million, or 28 cents per share a year earlier, when it booked a $131 million charge related to the settlement of the Tennessee dairy farmer class action litigation.

Adjusted earnings for the latest quarter was 36 cents per share, topping analysts' average estimate by 5 cents per share, according to Thomson Reuters I/B/E/S.

Net sales dipped to $3.13 billion from $3.30 billion a year earlier, due to lower dairy commodity costs.

Dean shares, which closed at $12.42, jumped to $15.80 on the announcements.

(Reporting By Lisa Baertlein in Los Angeles and Brad Dorfman in Chicago; editing by Andre Grenon)



Comments (1) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left

Ken    
Batavia, NY  |  August, 09, 2012 at 10:42 AM

Silk is not soy milk. It is soybean juice. What person in their right mind would drink that slop???? As for Organic milk......I need a moment to stop laughing. The taste is terrible, it is ultra pasteurized which make it mostly indigestible. Why is it ultra pasteurized anyways? Maybe to kill the high pathogen load that the raw organic milk has??? It seems regular pasteurization is not sufficient. The consumer needs to be education about these scams!!


RB4 Series Balers

The Case IH RB4 series balers, including the RB455 silage baler, consistently build dense round bales, even in varying crop ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Leads to Insight