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Danone shares rise after Earthbound Farm sale

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Danone shares rise after Earthbound Farm sale
FILE PHOTO: The logo of French food group Danone is seen at the company's headquarters in Paris, France, December 20, 2017. REUTERS/Charles Platiau/File Photo   -   Copyright  Charles Platiau(Reuters)
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PARIS (Reuters) – Shares in Danone rose on Friday as investors welcomed the French food group’s deal to sell its loss-making U.S. organic salad business Earthbound Farm.

Financial terms were not disclosed for the sale of the business, which generated revenue of about $400 million (£306.2 million) last year.

By 0710 GMT, Danone shares were up 0.6 percent at 69.54 euros.

Credit Suisse said Earthbound Farm had been a drag on Danone’s top line growth and profits, since it was acquired as part of Danone’s earlier purchase of U.S. organic food group WhiteWave.

“We estimate the disposal, on a proforma basis, would add 15-20 basis points to group organic sales growth and 20-30 basis points to operating margins,” wrote Credit Suisse.

“This disposal will help the company deliver its 2019 objectives of around 3 percent organic sales growth and over 15 percent operating margin,” added the investment bank.

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)

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