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Danone (BNFP; Baa1/BBB+) bids for Lifeway Foods (bolt-on)

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It already had a 23.4% stake but wants to upsize to full ownership; we see that costing $283.4m at the proposed $25/share (a 16% premium to Monday's close). It says it will finance by cash on hand (had €2b to end June). Lifeway does not bring debt with it leaving leverage impact negligible (+0.05x). It will on-board $50m in revenue/qtr - again a negligible to Danone's €7b.


When Mondelez was buying Chinese cake and pastries manufacturer yesterday we said we preferred to see investments into the faster growing health segment. Danone is sticking with its DNA on this - Lifeway specialises in Kefir which is considered high-protein and probiotic filled. Danone already retails such products under its brands but looks like it wants to accelerate exposure in the US. Lifeway has been riding impressive +25% volume-led growth for year ending June - it's equity holders will walk away with a near doubling YTD.

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It already had a 23.4% stake but wants to upsize to full ownership; we see that costing $283.4m at the proposed $25/share (a 16% premium to Monday's close). It says it will finance by cash on hand (had €2b to end June). Lifeway does not bring debt with it leaving leverage impact negligible (+0.05x). It will on-board $50m in revenue/qtr - again a negligible to Danone's €7b.


When Mondelez was buying Chinese cake and pastries manufacturer yesterday we said we preferred to see investments into the faster growing health segment. Danone is sticking with its DNA on this - Lifeway specialises in Kefir which is considered high-protein and probiotic filled. Danone already retails such products under its brands but looks like it wants to accelerate exposure in the US. Lifeway has been riding impressive +25% volume-led growth for year ending June - it's equity holders will walk away with a near doubling YTD.

Keep reading...Show less