Lactalis agrees to acquire Stonyfield for $875 million

French food giant Danone has signed an agreement with Lactalis to sell its U.S. dairy business Stonyfield for $875 million. Danone informed that the sale price offers 20 times the 2016 earnings multiple for Stonyfield. The U.S. dairy business of Danone generated $370 revenue in year 2016.

Danone signed the deal with Lactalis to ward-off any competition issues related to its acquisition of organic food group WhiteWave. The deal could be finished by third quarter of current year, Danone informed.

Danone management has been working on cost-cutting. The company revealed ‘Project Protein’ this year to save nearly $1.15 billion over next three years.

Commenting on the deal, market analysts at Liberum said, "The sale price appears reasonable and we expect proceeds would reduce leverage largely offsetting dilution from the disposal."

Lactalis is the largest dairy group in terms of revenue. The company also ranks as the second largest food company in France after Danone.