Lactalis, the privately-owned French dairy giant and owner of brands from President cheese to Rachel’s organic yoghurts, has fired the starting gun on the race for Yoplait.

The global yoghurt brand is jointly-owned by private-equity firm PAI Partners and French dairy co-op Sodiaal and, since the summer, speculation over the future of the Petits Filous maker has regularly grabbed the business headlines.

PAI became a shareholder in Yoplait eight years ago when the brand’s then sole owner Sodiaal sold half the business to the buy-out house. Now, PAI wants to sell its 50% stake and since July, the likes of Nestle, General Mills and Lactalis have been linked to Yoplait. There have even been rumours of interest from further afield, with Mexico’s Grupo Lala and China’s Mengniu Dairy mentioned as potential suitors.

Lactalis, which has made two significant acquisitions this year in the shape of Rachel’s and the dairy business of Spain’s Ebro Foods, looks to have elbowed its way ahead of the pack with a bid – reported at EUR1.3bn – for 100% of Yoplait.

The family-owned business tends to keep its cards close to its chest and played to type with a short statement on its offer for Yoplait.

However, the statement immediately created uncertainty, with Lactalis seeming to suggest that whilst it would accept a stake in Yoplait below 100%, it wanted majority control. “The takeover can only go ahead with a majority stake in Yoplait’s share capital allowing Lactalis to pursue a long-term strategy,” the company said.

For, while PAI is ready to sell its shares its Yoplait, the other investor in the business is unwilling to offload its stake. 

“Our position has not changed whatsoever in the light of today’s development,” a spokesman for Sodiaal told just-food yesterday. “We are maintaining our stake in Yoplait at 50%,” he added.

Of course, Sodiaal could be playing hard-ball and hoping to extract a higher offer from Lactalis or any other suitor interested in bidding for the whole of Yoplait.

Sodiaal has ‘first refusal’ on the PAI stake but it has no plans to go back to being the sole shareholder in Yoplait, the spokesman said.

The co-op is unlikely to be able to afford PAI’s shares. In June, Sodiaal secured a deal to buy fellow French co-op Entremont Alliance in a move that will create Europe’s fourth-largest dairy processor.

However, Sodiaal remains locked in talks over the reimbursement and restructuring of Entremont’s debts, which earlier this year were estimated at over EUR335m.

Sodiaal may insist that it will not sell any shares in Yoplait but financial pressure from the Entremont deal and the prospect of integrating a business to create one of Europe’s largest dairy processors may dictate otherwise. Lactalis, therefore, could get what it wants – provided the price is right.

Lactalis’s international presence is likely to appeal to Yoplait’s management. Last week, Yoplait CEO Lucien Fa told Reuters that the “best partner” for the business would be one that could help the business expand internationally. Outside France, Yoplait will be hoping to gain ground on Danone, which is stronger overseas.

Of course, the likes of Nestle and General Mills could also offer Yoplait greater international clout. General Mills has been the US licence-holder for Yoplait since 1977, although it is embroiled in a dispute with Sodiaal’s licence arm Sodima over the rights to the brand across the Atlantic.

Sodima had contacted General Mills earlier this year to renegotiate the deal then in September said it wanted to rip up the agreement. The US food giant has argued the agreement does not provide for renegotiation or termination on those terms and has filed for arbitration.

Meanwhile, Lactalis will no doubt hope that the French government still sees yoghurt as a ‘strategic’ sector, as it seemed to do back in 2005 when Paris sought to prevent a rumoured bid for Danone from PepsiCo. Lactalis could position itself as the only French company capable of buying Yoplait in the face of overseas competition.

The response of PAI, an investor in Yoplait for eight years, which is a long time for private-equity shareholder, is vital. If the speculation is right, a number of companies are interested in the yoghurt maker and, in a competitive race, it’s rarely the first bid will be waved through. Lactalis will need significant reserves of stamina as this race looks certain to run and run.

Editor’s note: Since this article was published, PAI and Sodiaal have announced that they have rejected Lactalis’s bid for Yoplait.