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Dean Foods Co. (NYSE:DF) announced on Wednesday that it intends to partially spin-off its WhiteWave Food Co. unit, which sells organic dairy products and soy milk under the brand names Horizon and silk respectively; even as the company turned profitable in the fiscal second quarter after incurring loss a year earlier.
For the quarter the company earned $56.2 million or 30 cents per share against a loss of $50.5 million or 28 cents per share, in the corresponding period of last year.
The company attributed the turnaround to falling prices of raw milk, which is by far the biggest cost component. According to the company, prices of raw milk fell 21% in the second quarter compared to the same period of last year.
Now, in order to leverage from strong image of WhiteWave’s brands, the company is seeking to raise nearly $300 million though initial public offering by offloading 20% stake in WhiteWave Food Company.
For quite some time now, analysts have been arguing in favor of spinning-off WhiteWave division from Dean Foods since they believe that the former is more valuable than DF’s other businesses.
A minimum of 80% of the new company stock will be held by Dean Foods Company while remaining interest in the company will be distributed to DF shareholders after the IPO is over.
DF stock rose more than 33% in early trading.
