Danone plans to acquire U.S. plant-based organic formula maker Kate Farms

By Abigail Summerville

NEW YORK (Reuters) -Danone said on Monday it has agreed to buy a majority stake in Kate Farms, a U.S. maker of plant-based organic drinks that will fit into the French food giant's specialized nutrition portfolio.

Santa Barbara, California-based Kate Farms makes formulas and shakes for everyday needs as well as for tube feeding for people with health conditions. 

Richard and Michelle Laver founded the company in 2012 after their daughter Kate, who has cerebral palsy, had difficulties with eating. Their products are sold to hospitals and consumers across the country.

“We consider Kate Farms very complementary to our specialized nutrition offerings and capabilities, which we believe will allow us to reach more consumers and patients and bring a high-quality new standard of care to more people with a wider variety of health needs,” Danone Group Deputy CEO Shane Grant said in an interview. “It’s a really important build for us in the U.S.” 

The size of the majority stake and financial terms were not disclosed.

Paris-based Danone, which owns yogurt brand Activia, plant-based milk brand Silk and Evian water, signaled its interest in acquisitions after it reported strong 2024 earnings in February.

Kate Farms has previously raised money from investors such as Goldman Sachs Asset Management and Main Street Advisors. In 2022, it raised $75 million in a Series C growth capital round. 

Kate Farms' senior management will retain a minority stake in the business, and its CEO, Brett Matthews, will serve as chairman and CEO of Danone's North American Medical Nutrition business. 

Danone has been operating in the U.S. since 1942, and now has more than 5,000 U.S. employees and 13 U.S. manufacturing facilities and one research and development hub. It has a market value of about $57 billion. The deal is subject to regulatory approval.

(Reporting by Abigail Summerville in New York; Editing by Edwina Gibbs and Louise Heavens)