Based in Dallas, TX, WhiteWave Foods (WWAV) scheduled a $300 million IPO with a market capitalization of $2.55 billion at a price range mid-point of $15, for Friday, October 26, 2012.
Five other IPOs were scheduled for the week of October 22. The full IPO calendar is available here.
S-1 filed October 17, 2012
Manager / Joint Managers: J.P. Morgan/ Credit Suisse/ BofA Merrill Lynch
Co Managers: Morgan Stanley/ Barclays/ Wells Fargo Securities/ Credit Agricole CIB/ SunTrust Robinson Humphrey
WWAV sells branded products in market segments that are growing, see below. It appears they may be somewhat capacity constrained in the US, where they have outsourced some of their packaging requirements. Institutional investors are in love with companies whose brands are competitively protected and are in growth markets.
We believe WWAV is a buy on the IPO and will increase from the IPO price, even though the P/E is high based on a comparative basis.
SPIN-OFF from Dean Foods (DF)
In connection with WWAV's IPO, WWAV and Dean Foods will enter into a separation and distribution agreement that will provide for the separation of WWAV's business from Dean Foods' other businesses. DF has a market capitalization of $3.3 billion, compared to WWAV's proposed $2.55 billion.
Upon completion of this IPO, WWAV expects to incur $885 million in new indebtedness which will be paid to DF. Annual interest payments are estimate to be $24 million.
|annualizing June 2012 3 mos|
|annualizing June 2012 3 mos|
|Dean Foods , parent|
|General Mills (GIS)|
|Kraft Foods (KRFT)|
WhiteWave markets and sells a variety of dairy and dairy-related products, such as Horizon Organic milk and other dairy products, The Organic Cow organic dairy products, as well as other plant-based beverages and soy food products, International Delight coffee creamers and LAND O LAKES creamers and fluid dairy products, and Silk plant-based beverages, such as soy, almond and coconut milks, and cultured soy products.
WWAVE also offers soy-based beverages and food products in Europe and markets its products under the Alpro and Provamel brands.
WWAVE has an extensive production and supply chain footprint in the United States. WWAV utilizes five manufacturing plants, two distribution centers, and three strategic co-packers across the country.
WWAVE also has four plants across Europe in the United Kingdom, Belgium, France, and the Netherlands, each supported by an integrated supply chain that enables us to meet the needs of our customers.
MARKET GROWTH TRENDS
Plant-based foods and beverages represented a $1.9 billion category in the United States and Europe in 2011, and experienced a CAGR of 8% from 2009 to 2011.
WWAV believes almond-based beverages were among the fastest growing subcategories in the U.S. consumer packaged food and beverage industry, with a CAGR of 170% from 2009 to 2011 and representing a $289 million subcategory in 2011.
Coffee creamers and beverages represented a $3.6 billion category in the United States in 2011, and experienced a CAGR of 9% from 2009 to 2011. The subcategories in which WWAV competes, flavored coffee creamers and ready-to-drink coffee beverages, experienced CAGRs of 16% and 8%, respectively, from 2009 to 2011.
Premium dairy, which includes organic and other value-added dairy products, represented a $2.3 billion category in the United States in 2011, and experienced a CAGR of 8% from 2009 to 2011.
Organic milk represented $1.2 billion in sales in the United States in 2011 and experienced a CAGR of 11% from 2009 to 2011. This robust growth is largely driven by a rising consumer preference for nutritious and organic products.
MANUFACTURING CAPACITY CONSTRAINTS
WWAV believes its growth has significantly increased plant utilization rates, particularly in the United States. In response, WWAV has increasingly relied on a co-packing network, which has resulted in higher costs for the production and distribution of products.
WWAV says it will continue to utilize its co-packing network, as needed, to meet production requirements, while at the same time continuing to invest to expand internal production capabilities, such as the Dallas, Texas manufacturing facility which commenced operations in the fourth quarter of 2011.
WWAV's business is affected by seasonal changes in the demand for products in the coffee creamers and beverages category. Sales of coffee creamers tend to increase during the first and fourth quarters of the year, primarily due to increased coffee consumption during the cooler autumn and winter months and seasonal holidays, with a reduction in sales in the second and third quarters of the year.
Demand for WWAV's plant-based foods and beverages and premium dairy products, however, is generally evenly distributed throughout the year.
Competitors include Group Danone, General Mills, Kraft Foods and Nestle S.A.
USE OF PROCEEDS
WWAV expects to net $282 million from it IPO. Proceeds are allocated to repay debt.
Disclaimer: This WWAV IPO report is based on a reading and analysis of WWAV's S-1 filing which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.