- Dean Foods (NYSE:DF) closed with a slight loss in today's trade even after easily beating Q1 earnings expectations, issuing solid Q2 guidance and purchasing Friendly's Ice Cream for $155M.
- DF expects Friendly’s to immediately add to earnings and margins; DF is buying only the manufacturing and retail ice cream business, which generated $166M in annual net sales and posts low double-digit growth in both volume and net sales, while P-E firm Sun Capital Partners will continue to own and operate the chain’s 260 U.S. restaurant locations and will license the use of the Friendly’s trademark.
- But Athlos Research's Jonathan Feeney warns that declining demand for milk remains a major problem for DF, and believes the recent addition of competitor capacity by Wal-Mart amid flat retail milk demand is ominous for DF’s capacity reduction plans, especially when prices rise.