Blog: Dean BestGeneral Mills' Yoplait challenge

Dean Best | 18 March 2011

And so, with the news that General Mills is in exclusive talks to buy into dairy business Yoplait, we could be reaching the end of one of the more closely-fought takeover battles the food industry has seen in recent months.

When it emerged last summer that a stake in Yoplait could soon be on the block after one of the yoghurt brand's two shareholders PAI Partners announced it wanted to sell up, General Mills was seen as a likely candidate to enter any auction for the shares.

The US food group had held the Yoplait licence across the Atlantic since 1977 and had built the brand in its domestic market - a market where yoghurt consumption still lags behind Europe.

However, during the autumn, news broke that General Mills and Sodiaal, the other shareholder in Yoplait, had fallen out over the future of the US licence. Sodiaal first wanted to renegotiate the terms of the deal. Then, it wrote to General Mills to say it wanted to end the deal in 2012. General Mills said the agreement did not allow for renegotiation or termination in those circumstances and called for an arbitration panel.

Sodiaal, meanwhile, had said that, even if PAI sold its shares, it still wanted to remain an investor in Yoplait. On the face of it, Sodiaal's dispute with General Mills made it harder to see the US group becoming the French dairy co-op's long-term partner in Yoplait.

However, with General Mills now in exclusive talks to buy PAI's stake in Yoplait, it seems the two companies will soon be working together a lot more closely.

Some analysts in the US believe General Mills moved for PAI's shares to remove the risk of it losing the US licence to Yoplait, a brand that accounts for 15% of the company's sales.

Should General Mills secure an agreement and become a Yoplait shareholder, its US licence will be safe but the next task will be to expand the dairy business globally.

In 2002, when Sodiaal sold a 50% stake in Yoplait to PAI and became a part shareholder in the business, the co-op hoped the partnership with the private-equity fund would boost growth in emerging markets. With over 80% of Yoplait's sales in North America and Europe, General Mills would have something of a job to do.


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