Dean Foods shares fall on WhiteWave spinoff

NEW YORK -- Shares of Dean Foods fell Friday after the company completed the spinoff of its organic dairy company.

THE SPARK: Shares of WhiteWave Foods started trading Friday morning on the New York Stock Exchange after its initial public offering of shares priced at $17 per share.

THE BIG PICTURE: WhiteWave Foods Co. sells Horizon organic milks and plant-based dairy alternatives, such as Silk Soymilk. Its spin off comes at a time when the organic and natural foods segment is growing faster than the broader packaged food market.

Dean Foods, one of the nation's largest dairy processors and milk distributors, owns a majority of WhiteWave shares and is using proceeds from the IPO to pay down debt. WhiteWave raised $391 million in the offering. The shares are trading under the ticker "WWAV."

THE ANALYSIS: The spin off prompted Stifel Nicolaus analyst Christopher Growe to cut his rating for Dean to "Hold" from "Buy," saying that the higher-than-expected valuation of WhiteWave shares, which had been projected to price at between $14 and $16, has resulted in a run-up in the value of Dean shares in recent weeks.

While the shares could be worth upwards of $20, the benefits of the IPO aren't enough of a reason to pick up the shares right now, he said.

THE SHARES: Down $2.10, or 11.1 percent, to $16.69 in afternoon trading, after dropping as low as $15.60 earlier in the day. Over the past 52 weeks, the company's shares have traded between $9.16 and $19.17.