Dean Foods Co. (fka DFODQ)

[MiamiGent]

DF Shares of Dean Foods soar 40 percent on IPO news [The Dallas Morning News]
BY MCT Business News 3:43 AM ET 08/09/2012

http://stockcharts.com/h-sc/ui?s=df

Aug. 09--Shares of Dallas-based Dean Foods Co. were up 40 percent Wednesday as investors reacted to a longtime wish come true.

For some time analysts have questioned the nation's largest dairy producer about unhitching its fast-growing organic milk and soy milk operation, seen as a cash cow, from the unit that produces traditional milk.

After the market closed Tuesday, Dean announced plans to launch an IPO for 20 percent of its WhiteWave-Alpro unit, which makes popular brands including Horizon organic milk, Silk soy and almond milks and Alpro soy foods and drinks. Dean will retain the other 80 percent.

Eventually Dean will spin that off, tax free, to its stockholders, who responded to the news by pushing up the company's stock price by $5.04 to $17.46 a share Wednesday.

It was the biggest percentage gain by far of any stock in the Standard & Poor's 500 index.

"WhiteWave-Alpro and the rest of Dean Foods have distinct product portfolios and business dynamics that require different management styles [and] operating philosophies," Gregg Engles, Dean's chief executive and chairman, told analysts Wednesday. "As such, we believe that the separation of WhiteWave-Alpro and Dean Foods is the next logical step in our journey to create value for our shareholders."

In the past, Dean Foods executives have pointed to the negative implications a split would have for Dean's debt load.

Under the current plan, IPO proceeds of about $300 million and an additional $800 million to $925 million borrowed by the new WhiteWave company would be used to pay down Dean Foods' debt.

Even without the split, Dean has focused on reducing its debt load.

"Our strong operating performance and the resulting improvement in our balance sheet has provided the enhanced financial flexibility necessary to pursue the separation of the business," said Engles, who will become chairman and chief executive of WhiteWave Foods Co. while also remaining Dean's chairman.

Engles said the company has "dramatically reduced our leverage over the last year," and added that net debt declined by $196 million between the first and second quarters.

The company's net debt stood at $3.5 billion at the end of the second quarter.

Follow Karen Robinson-Jacobs on Twitter at @krobijake.