Danone

Note: This is a daily stock update and the information stands true as of 24/09/24, 09:00 CEST.

Company Update:
Danone is launching a takeover bid on Lifeway, the US kefir producers. Danone already owns c.24% of the company’s capital.
Danone is proposing c.$283.5m to buy the remaining stake of the company in cash, $25 per share, a 17% premium vs. yesterday’s share price and a 59% premium vs. the average share price during the last 3 months. It represents a multiple of EV/EBIT of c.22.3x, somewhat expensive, but well below the 33x multiple of the WhiteWave acquisition in 2016. Lifeway accounts for less than 1% of Danone group’s topline but has posted a good growth profile, especially since COVID, with an increased interest in kefir and probiotic products.

Expert Opinion:
The kefir market is quite dynamic and even if this acquisition is small in terms of size for Danone, it is interesting. The share price performance has been strong since the new CEO Mr. de Saint-Affrique took over and refocused the company on its fundamentals. The valuation is now back in line with its historical levels pre-Faber time. Our reduce rating is predicated on limited upside. But while the PE24 of 18.3x may seem high, the expected EPS growth and Danone’s unique positioning on the food/health segment is attractive in my view. Danone is a stock to own to play more rerating.

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