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Bullboard - Stock Discussion Forum Invesco Trust for Investment Grade Municipals VGM

Invesco Trust for Investment Grade Municipals (the Trust) is a diversified, closed-end management investment trust. The Trust's investment objective is to provide common shareholders with a high level of current income exempt from federal income tax, consistent with preservation of capital. It will invest substantially all of its assets in municipal securities rated investment grade at the time... see more

NYSE:VGM - Post Discussion

Invesco Trust for Investment Grade Municipals > 🐄WhiteWave-Danone Merger: Who Got the Better Deal?🐄
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Post by JulianAssange on Mar 30, 2017 10:18pm

🐄WhiteWave-Danone Merger: Who Got the Better Deal?🐄

March 23, 2017
Investors in U.S.-based alternative dairy products and health food company WhiteWave Foods Co.
are ready to rake in returns as final discussion take place with the U.S. Department of Justice regarding the firm’s $12.5 billion takeover by French dairy giant Danone.

WhiteWave, the maker of Silk almond milk and Earthbound Farm organic salad, saw its stock spike on the news, just below its purchase price of $56.25 per share, trading at $55.70 per share on Thursday afternoon.

Downward Revisions

A recent Bloomberg analysis titled “WhiteWave Really Milked Danone,” suggests that WhiteWave investors received the better end of the deal, as its shares may have been at risk without a buyout.

While Denver-based WhiteWave has posted growth at a rate faster than its packaged food counterparts due to shifting consumer preferences, its sales and earnings have slowed down and fallen short of estimates over past two quarters.

The branded plant-based food and beverage company has benefited largely from a long-term shift in Millennial preferences for organic, gluten-free, fresh produce, and other alternative products. Yet a significant growth deceleration has led analysts to reduce full-year revenue expectations after the health food company scored its high-priced takeover.

Revised Estimates

While the Street had initially forecasted WhiteWave generating $5 billion in sales by 2018, the consensus estimate now remains at $4.66 billion. Bloomberg’s Tara Lachapelle indicates that using revised estimates, the transaction values WhiteWave at 23 times its trailing 12-month EBITDA, extremely high in relation to other food and beverage deals over the past five years, with a median EBITDA multiple of just 12.

While the deal is pricey for Danone, the move reflects the firm’s desperation to expand its profits and invest in emerging markets after lagging behind on R&D and failing to revamp its products such as its Activia yogurt brand. Danone will need push cost-cutting and sales big time in order to justify its latest acquisition.

https://www.investopedia.com/news/whitewavedanone-merger-who-got-better-deal/
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