Organic food company SunOpta soars 33% on news it is to be acquired

The market value of SunOpta, a producer of plant-based beverages, jumped nearly a third on Friday, February 6, as investors were reacting to the announcement that the company will be acquired at a premium by Dutch beverage packaging provider Refresco.

SunOpta shares rose nearly 33% to $6.40 apiece on the Nasdaq on Friday, their highest mark since September.

The rally followed the announcement that Refresco plans to acquire the company. Under the terms of the agreement, it will pay $6.50 per share, about 35% above the closing price on Thursday, the day before the deal was announced.

The transaction has already been approved by the boards of both companies and is now awaiting approval from shareholders, regulators, and a Canadian court, a standard procedure for issuers listed on the Toronto Stock Exchange. On the TSX, SunOpta shares rose 31.4% on Friday.

The parties expect to complete the transaction in the second quarter, after which SunOpta will become a wholly owned subsidiary of Refresco and its shares will cease trading, the companies said.

SunOpta will gain additional resources to support growth as a result of the deal, while Refresco will expand its position in the fast-growing plant-based beverages category and strengthen its presence in North America, the press release said.

SunOpta is a leading producer of plant-based beverages and fruit snacks, controlling about 70% of the U.S. market for shelf-stable plant-based milk, Freedom Broker wrote in an initiation report in December. The stock was assigned a “buy” rating and a target price of $7.50 per share, owing to the company's expansion plans, improving financial performance, and manageable risks, including rising competition from large corporations such as Danone and retailers’ private-label brands.

After the deal was announced, Freedom downgraded the stock to “hold” and lowered its target price to $6.50 per share. Upside is now limited by the offer price, while remaining risks relate primarily to standard closing conditions, including shareholder, court, and regulatory approvals, the analysts said in a note seen by Oninvest.

The stock now carries three “buy” ratings and three “hold” ratings from Wall Street analysts, according to MarketWatch data. The average target price of $7.40 per share is nearly 16% above the latest closing price.