On June 9, 2015, it was announced that WhiteWave Foods acquired a company called Vega, a leader in plant-based products. WhiteWave agreed to buy Vega for $550 million in cash. Vega is known for their plant-based nutritional products, namely protein powders and the like.
CEO Gregg Engles commented on the deal, saying: "Vega's plant-based nutrition products complement our plant-based foods and beverages portfolio. With its strong brand, high-quality products, and commitment to innovation and sustainability, Vega is a perfect fit for WhiteWave." He continued, "The team has built an incredible mission-driven company, which has succeeded by consistently delivering innovative plant-based nutrition products. This compelling, accretive transaction is consistent with our strategy to expand on the scope of our business into high-growth and on-trend categories. We are excited to welcome them to the WhiteWave family." Last year, Vega had sales of about $100 million and is growing quickly, much like WhiteWave. The latter's acquisition is expected to add $0.06 to earnings in 2016. WhiteWave sees its acquisition's additions to 2015 earnings as neutral to modest. The Dean Foods spinoff is up almost 200% since its IPO, and the recent acquisition supports the company's thesis of being a long term growth play on natural and organic food and beverage products. Some see this as WhiteWave's way of avoiding a buyout, because a lot of debt on its balance sheet is not attractive to suitors. What do you think?
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My original post got deleted (stupid Weebly!), so I've decide to take a slightly different approach as I'm rewriting this piece. What are the odds that Whitewave will be acquired or merge with another company, such as Hain Celestial?
I highly doubt that there will be a merger between the two. I'd sooner back WWAV being acquired by a company such as General Mills, and then possibly HAIN would be acquired by the same company later on down the road. Both natural and organic plays are doing very well on their own, and their products don't really overlap/compete. An outright merge between the two companies certainly isn't a priority or necessary in my opinion.
From a technical standpoint, Whitewave seems poised to being acquired in the near-term. Today, May 27th, 2015, WWAV traded with more than double its average volume, spiking on high volume at around 11:00 am. Large call buying of the July $50 options further supports this bullish bet. The day prior there was also heavier volume. In short, Whitewave is being accumulated, which I believe hints at a buyout. The momentum is certainly with this name, and I believe it should be bought on weakness. I've been long since the mid-$30s and I plan on selling half of my position should a buyout actually take place. Please let me know what you thought of this post by commenting below! |