WhiteWave Enters China and U.S. Produce
WhiteWave Foods Co., the 2013 spinoff from Dean Foods, has done some wheeling and dealing in the past month that takes it far afield from its U.S. dairy (or nondairy) roots. In early January it acquired organic produce company Earthbound Farm, and in late January it signed a joint venture agreement with China Mengniu Dairy Co. Ltd.
The Chinese joint venture company, which WhiteWave didn't name, intends to manufacture, market and sell a range of nutritious products in China. As a secondary step in the China deal, the joint venture also executed an agreement to purchase Yashili Zhengzhou, a subsidiary of Yashili International Holdings Ltd. Zhengzhou’s primary asset is a production facility currently under construction in China, where the joint venture intends to manufacture its products. Mengniu is the majority owner of Yashili.
Under the terms of the agreement, Denver-based WhiteWave will own a 49 percent stake in the venture and Mengniu will own 51 percent. The purchase price for Zhengzhou is expected to be approximately $85 million, including approximately $62 million for the purchase of equity and the balance for the repayment and assumption of debt and other obligations. The parties expect to make additional investments to support the start-up and commercialization of the joint venture.
“This joint venture is consistent with WhiteWave’s strategy to expand into new geographies and provides a unique opportunity for us to access the Chinese market, one of the world’s largest consumer markets with a rapidly growing, multi-billion dollar nutritious products segment,” said Gregg Engles, chairman and CEO of WhiteWave.
Earlier in the month, WhiteWave bought Earthbound Farm for approximately $600 million in cash. “WhiteWave will now provide the two most popular gateways for consumers to enter into the organic category – produce and dairy – and have a significant foothold in the fresh foods category, which represents one of the most attractive, emerging trends in the food industry today,” said Engles.
Earthbound Farm will be a separate business unit, based in San Juan Bautista, Calif., with no significant operational changes anticipated. However, Kevin Yost was named president of Earthbound Farm, while Charlie Sweat, previous CEO, will move into an advisory role; the rest of the Earthbound Farm management team will remain. Yost comes from Saputo Inc., and previously worked at Dean Foods' Morningstar Div. (where he worked for Engles), ConAgra and Swift.