The Moon Phase

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WSJournal. Dean, Marathon Split-Offs on Tap
http://on.wsj.com/PLYSxV

NEW YORK—Three IPOs are expected to reach the market in the coming week, with two of those arriving as split-offs from existing public companies—dairy company Dean Foods Co. DF +2.01% and refiner Marathon Petroleum Corp.

Dean, the largest U.S. dairy producer by revenue, will carve out its higher-margin organic and soy business into an independent company with the initial public offering of WhiteWave Foods Co., expected Friday.

Dean, based in Dallas, will sell 20 million WhiteWave shares to help pay down existing debt, creating new common stock for the maker of Horizon Organic dairy products and Silk-brand soy and almond milks. The deal is valued at $300 million.

Analysts see sales-growth potential for higher-price organic products, and so far this year, investors have been keen to jump on board with new issuers tied to organic foods.

Natural- and organic-food company Annie's Inc. delivered the year's third-biggest first-day stock jump, and shares have more than doubled since the company's March IPO.

Shares of Natural Grocers by Vitamin Cottage NGVC -1.83% which operates health-food stores that sell organic products and dietary supplements, have climbed more than 40% since their July IPO.

"Institutional investors have been totally in love with big brands, especially organic," said Francis Gaskins, founder of research firm IPODesktop.com.

WhiteWave's annual sales have climbed nearly 60% over the past five years, reaching $1.9 billion in 2011. Dean's nonorganic fresh milk sales rose 24% over the same period.

Roughly four-fifths of WhiteWave's sales are from North America, and the company derives the rest from sales of soy-based beverages and food products in Europe under the Alpro and Provamel brands.

Dean Foods's longtime chairman and chief executive, Gregg Engles, will become CEO of Broomfield, Colo.'s WhiteWave. Mr. Engles will step down as Dean's CEO but remain chairman. Taking the helm at Dean will be Gregg Tanner, president of Dean's fresh dairy direct division. Dean will retain an 88% stake in WhiteWave after the offering, according to a filing with the Securities and Exchange Commission.

Last month, Dean confirmed that it is also exploring the sale of its Morningstar dairy business, the smallest of its three segments. Dean's shares have climbed nearly 50% since the offering was announced, rising more than 20% this past week. WhiteWave is scheduled to list Friday on the New York Stock Exchange under the ticker "WWAV."

Two other deals expected in the coming week are in the recently hot area of master limited partnerships, which are publicly traded entities that typically own and operate pipelines for oil and natural gas and other cash-producing assets. In recent years, MLPs' payouts, between about 6% and 7%, have been attractive to investors looking for alternatives to low-yielding bonds.

In addition to relatively high yields, MLPs are typically backed by long-term fee-based cash flows, and tend to offer stable returns that are less vulnerable to commodity-price fluctuations, said Jason Stevens, analyst at Morningstar.

Eight MLPs have come to market this year with a combined deal value of $3.3 billion, higher than any year since 2007, according to Dealogic.

The largest of the week's two MLP deals comes from MPLX LP, formed by refining company Marathon Petroleum, which is selling 15 million shares in a deal expected to raise $300 million. MPLX, based in Ohio, owns and operates a crude-oil pipeline system that stretches across the Midwest, as well as in segments of Louisiana and Texas.

MPLX's units are expected to trade on the NYSE on Friday under the ticker "MLPX."

Allentown, Pa.'s, Lehigh Gas Partners LP, formed by Lehigh Gas Corp., distributes motor fuels and leases fueling sites from Ohio to Massachusetts and is expected to sell six million units valued at $120 million. The IPO, expected Friday, will list on the NYSE under the symbol "LGP."