Deutsche Bank Downgrades The WhiteWave (WWAV) to Hold; Competing Bid 'Relatively Unlikely', Says Analyst
Deutsche Bank downgraded The WhiteWave Foods Company (NYSE: WWAV) from Buy to Hold with a price target of $56.25 (from $50.00). Earlier Danone and The WhiteWave Foods announced that they entered into a merger agreement. In the view of analyst Mario Contreras, a competing bid would not be a major surprise but is "relatively unlikely."
"Following the acquisition agreement with Danone, we raise our price target for WhiteWave to the agreed deal price and downgrade to HOLD. We see a strong strategic fit between the two companies and believe Danone can extract the most synergies from WhiteWave relative to other potential suitors. Thus, we feel Danone is best positioned to make the most attractive offer. While it would not be a major surprise to see another competing bid, we nevertheless view this as relatively unlikely," said Contreras.
"Investors remain focused on the possibility of a competing offer for WhiteWave. Among U.S. based packaged food companies, we would see General Mills and Campbell Soup as the best potential strategic fits for WhiteWave. But both companies have smaller U.S. Refrigerated scale and international presence than Danone (and thus less synergy potential) while leverage could also be an issue. Other names that have been mentioned in the past (but we feel are relatively unlikely) include Coca-Cola, Pepsi, and Nestle," added the analsyt.
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Shares of The WhiteWave Foods Company closed at $47.43 yesterday.