Dean Foods Company’s (DF) spin-off of its subsidiary, The WhiteWave Foods Co. (WWAV) reached the final stage with the former announcing the price of its Class A shares in WhiteWave.
Dean Foods is offering its WhiteWave shares at $17.75 per share. The transaction is expected to close on Jul 25. As part of the offering, 29.9 million of WhiteWave’s Class A shares that are currently held by Dean Foods will be issued to the public, diluting the latter’s stake in the former. Additionally, the offering provides the underwriters an option to buy the remaining 4.5 million Class A shares held by Dean Foods in 30 days.
The debt-for-equity offering has been formulated in a manner that makes it eligible for a tax-free transaction. After completion of this transaction, Dean Foods will no longer have any stake in WhiteWave.
WhiteWave has appointed J.P. Morgan Securities LLC, BofA Merrill Lynch, Credit Suisse Securities LLC, SunTrust Robinson Humphrey and Wells Fargo Securities as joint managers for the offering. Moreover, Credit Agricole CIB and Rabo Securities will be acting as the co-managers.
Formerly, WhiteWave was a wholly owned subsidiary of Dean Foods. In Oct 2012, in order to relieve debts, Dean Foods decided to separate the Silk soy products and Horizon Organic dairy products manufacturer through an Initial Public Offering (IPO) and consequently diluted its 20% stake in WhiteWave.
Since then, this Zacks Rank #3 (Hold) company has been continuously reducing its stake in WhiteWave. Dean Foods, which competes with Lifeway Foods Inc. (LWAY) and Synutra International Inc. (SYUT) distributed 47,686,000 Class A shares and 67,914,000 Class B shares of WhiteWave on a pro-rata basis last month.
We believe that these strategic moves will boost the company’s shareholder value and offer growth opportunities for both Dean Foods and WhiteWave.
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