Dean Foods still aims to deleverage, will fund purchase from revolver

By Stephanie N. Rotondo

Portland, Ore., June 15 -Dean Foods Co. said Monday it remained committed to deleveraging its balance sheet, though it planned to use funds from its revolving credit facility to pay for an acquisition.

"Dean Foods remains committed to deleveraging its balance sheet to below 3.5x funded debt to EBITDA, as defined by its bank agreement," the company said in a press release announcing the takeover.

"Inclusive of the EBITDA and debt impacts of this transaction, the company continues to expect to achieve that goal and will not raise additional equity as a result of this transaction."

On Monday, the Dallas-based food processor announced it was acquiring the Alpro division of Belgium-based Vandermoortele NV for €325 million. The Alpro unit will add to Dean's soy beverage product lines with its Alpro soya and Provamel brands. Alpro is a leader in the European soy-based beverage market, with about €260 million in sales in 2008.

"We think this is a great deal that establishes Dean Foods as a clear global leader in the attractive soy beverages and related products category, with over $1 billion in combined annual retail sales," said Gregg Engles, Dean Foods' chairman and chief executive, in a press release. "This is one of the most strategic assets we could have acquired. We see significant opportunities to leverage the collective strengths of both businesses across a global soy platform to accelerate growth."

"We are confident that this is a winning acquisition," commented Joe Scalzo, president and CEO of Dean's WhiteWave-Morningstar division. "We fundamentally believe that the soy market is an emerging category with potential to bring more nutritious soy products to more people in more places around the world."

Added Alpro's CEO, Bernard Deryckere, who will report to Scalzo: "We look forward to being part of Dean Foods, a strong organization that shares our passion for brands. With our successful European market strategy, compatible values and great staff, we can build a strong future as part of Dean Foods."

Additionally, during an investor call to discuss the merger, Engles noted that Dean had been following Alpro since 2002.

"We frankly did not believe it would ever become available," he said of what he later called a "fortuitous opportunity." Due to the credit crunch, however, the division did become available and Dean reacted.

"I could not be more pleased about this transaction," Engles said. "We believe this transaction creates value that is larger than the sum of its parts."

The acquisition is hoped to be "modestly accretive" to 2009 earnings.

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