Dean Foods Company’s (DF - Analyst Report) spin-off of its subsidiary, The WhiteWave Foods Co. (WWAV - Snapshot Report) reached the final stage with the former announcing the completion of its Class A shares offering in WhiteWave last week. This was additional to the sale of 4.5 million shares to underwriters.
Dean Foods offered its WhiteWave shares at $17.75 per share on Jul 17. As part of the offering, 29.9 million of WhiteWave’s Class A shares that were held by Dean Foods were issued to the public. This diluted Dean Foods’ stake in the subsidiary. Additionally, the offering provided underwriters an option to buy the remaining 4.5 million Class A shares held by Dean Foods in 30 days.
The offering, which was formulated in a manner that makes it eligible for a tax-free transaction garnered approximately $589 million for Dean Foods. After completion of this transaction, the company now does not have any stake in WhiteWave.
Based in Dallas, Texas, Dean Foods is a leading processor and distributor of milk and other dairy products in the U.S. as well as a leading manufacturer of various specialty food products. The company operates primarily on a local basis, competing mostly with local and regional operators.
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 - Snapshot Report) and Synutra International Inc. , 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 such strategic moves will boost the company’s shareholder value and offer growth opportunities for both Dean Foods and WhiteWave.