General Mills to achieve full ownership of North America Yoplait business after deal with French dairy Sodiaal

NORTH AMERICA – General Mills has entered into an agreement to sell its 51% stake in Yoplait’s European business to Sodiaal in exchange for Sodiaal’s 49% stake of Yoplait Canada.

The deal also involves a  drastic reduction of royalties on sales of Yoplait and Liberté branded yogurt sold in the United States and Canada.

According to General Mills, after the transaction closes, the company would completely own North American yogurt operations that generated US$1.4 billion in net sales in the fiscal year 2020. In contrast, the European arm of Yoplait had US$740 million of net sales in the fiscal year 2020.

When General Mills acquired a 51% stake of Yoplait in 2011 for US$1.2 billion, the brand was the world’s second-largest in the yogurt category.

In the last nine years, different varieties of yogurt such as Greek, Icelandic skyr, plant-based and Australian, have entered the market, diluting Yoplait’s sales and potential.

While U.S. sales of Yoplait were up 5% in the most recent earnings report, yogurt sales have dragged General Mills’ earnings down in the past.

According to Mintel statistics cited in U.S. News & World Report, U.S. yogurt sales peaked in 2015 at US$9 billion. They’ve fallen every year since, and were projected to total US$8.2 billion in 2019.

Analysts thus see that the swap of its European stake for full ownership of Yoplait’s North American business could be part of a plan by General Mills to divest itself from the Yoplait brand.

General Mills sold its Chinese Yoplait business last March to private equity firm Tiantu Capital. Analysts said this sale was driven by more competition and slowing demand.

With the U.S. economy in a recession and analysts predicting a slow recovery after the pandemic has ended, a sale could probably be the best option for General mills.

L’Agefi, a French financial newspaper, has reported that the company is working with Morgan Stanley on a potential sale, though General Mills has not made any comment on the matter.

A sale of the entire brand, L’Agefi reported, could be worth nearly US$3 billion with French dairy cooperative Sodiaal being reported to be given the first opportunity to purchase the brand if it is sold.

General Mills isn’t the only company that may be looking at its yogurt business with a critical eye. Global yogurt giant Danone once had a nearly 21.3% stake in Japanese probiotic business Yakult.

It sold most of its stake in 2018, and announced this week it is putting the remaining 6.61% it still owned in the company up for sale.

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