uploads///WhiteWave Foods Stock Rose after Takeover Announcement

WhiteWave Foods’ Stock Soared on Its Takeover Announcement

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Jul. 13 2016, Updated 11:08 a.m. ET

Stock soared 19%

On July 7, 2016, after the announcement of a definite merger agreement between Danone (DANOY) and WhiteWave Foods (WWAV), WhiteWave’s stock soared by 19% to close at $56.23, compared to its previous day’s closing price of $47.43.

The stock rose by another 1% on July 8 and closed at $56.64. The stock was trading close to its 52-week high of $56.82 on July 8. It had risen by as much as 45% in 2016 as of July 11.

WhiteWave rose by 12% in 2015 due to its ongoing positive earnings and revenue growth trends. The stock rose by 7% on May 10, 2016, when the company reported its 1Q16 results ended March 31, 2016, with a 14% rise in revenue and a 17% rise in earnings year-over-year.

On July 11, WWAV closed at $56.13, which was 32%, 24%, and 19% above its 100-day, 50-day, and 20-day moving averages, respectively. WhiteWave’s shares have risen by 235% since it went public in 2012.

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Downgrade’s effect on the stock

After the merger announcement, many companies downgraded the stock, as we discussed in the first part of the series. The stock fell by 1% and closed at $56.13 on July 11 after its downgrade. However, most companies also raised their target prices on the stock.

Peers in the industry

WhiteWave Foods, based in Denver, Colorado, is a consumer packaged food and beverage company. Its peers in the industry include Hain Celestial (HAIN) and McCormick & Company (MKC).

Hain Celestial’s stock also rose by 7% after the WhiteWave takeover news due to speculation about its being a potential buyout target. HAIN had risen by 32% so far in 2016 as of July 11. McCormick had risen by 23.8% so far in 2016 as of the same date. Hain Celestial and McCormick closed the July 11 trading day at $52.32 and $105.94, respectively.

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests ~1% of its holdings in WWAV. The ETF closed at $107.24 on July 11 and has returned 8.3% YTD.

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