General Mills announced on Thursday that it plans to sell its North American yogurt business to French dairy giants Groupe Lactalis and Sodiaal in a deal valued at $2.1 billion. Groupe Lactalis is set to acquire the U.S. segment, while Sodiaal will take over the Canadian operations.
General Mills is selling its North American yogurt division for $2.1B in cash.
Lactalis is buying the U.S. operation while Sodiaal is purchasing the Canadian one.
General Mills is divesting three manufacturing facilities along with brands like Yoplait, Liberté, Go-Gurt, Oui,… pic.twitter.com/bxxPeXUVxg
— CPG WIRE (@cpgwire) September 12, 2024
Back in April, whispers circulated that General Mills had engaged JPMorgan Chase to find potential buyers for its yogurt division, which includes well-known brands like Yoplait and Liberté. This strategic move aligns with a broader industry trend where packaged food companies are offloading slower-growing units. By tightening costs and honing in on their core brands, these companies aim to meet the demands of consumers who are increasingly seeking more affordable options.
Jeff Harmening, the CEO of General Mills, emphasized that the divestiture would enable the company to focus on brands with stronger profit margins. “By streamlining our portfolio, we’re better positioned to invest in areas with the greatest growth potential,” he remarked in a statement.
The U.S. yogurt market has become fiercely competitive. Yoplait, once a dominant player, now faces stiff competition from rivals like Chobani, a privately held company, and Danone’s Dannon brand. This intense rivalry has made it challenging for Yoplait to maintain its market share.
Financially, the North American yogurt business contributed approximately $1.5 billion to General Mills’ net sales in fiscal year 2024. The company expects the deal to be finalized in 2025. However, it’s anticipated that adjusted earnings per share will be diluted by about 3% in the first year following the transaction’s completion.
📣 JUST IN: $GIS General Mills to Sell North American Yogurt Business for $2.1 Billion – WSJ
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📍 Deal includes brands… pic.twitter.com/0045PhrdX3
— Hardik Shah (@AIStockSavvy) September 12, 2024
Earlier reports from Bloomberg News had indicated that General Mills was in discussions to sell its North American yogurt operations to Groupe Lactalis and Sodiaal, a report now confirmed by the official announcement.
Yoplait’s story began in 1964 when a group of French dairy farmers came together to create the brand. In 1977, a significant partnership was forged when General Mills secured exclusive rights to market Yoplait products in the United States through a franchise agreement. This alliance greatly expanded Yoplait’s presence in the American market.
In a strategic move in 2011, General Mills acquired a 51% stake in Yoplait for $1.2 billion from private equity firm PAI Partners and Sodiaal, which retained the remaining 49%. This acquisition was aimed at strengthening General Mills’ foothold in the yogurt industry.
However, in 2021, the company sold its European operations of Yoplait back to Sodiaal, signaling a shift in focus toward other growth opportunities. The latest decision to sell its North American yogurt business underscores General Mills’ intent to streamline its offerings and concentrate on more profitable segments.
This transaction not only reshapes General Mills’ portfolio but also alters the competitive landscape of the yogurt industry in North America. As the company reallocates its resources, it will be interesting to see how this move impacts its growth trajectory and how Groupe Lactalis and Sodiaal integrate these new assets into their existing operations.
General Mills is selling Yoplait 👀‼️
Why? It’s pretty simple.
GM makes $20B a year —
$1.5B comes from yogurt division
… so very minimal contributionMeanwhile you have insane competitors like Chobani that have seriously made a dent in their market share and legacy like… pic.twitter.com/4pc7Wt3TNB
— Andrea (@iiiitsandrea) September 12, 2024
By refocusing on its core brands, General Mills aims to navigate the changing consumer landscape more effectively. The sale marks a significant chapter in the company’s history and could have lasting implications for the food industry at large.
Major Points:
- General Mills announced a $2.1 billion deal to sell its North American yogurt operations, including brands like Yoplait and Liberté, to French dairy companies Groupe Lactalis (U.S. segment) and Sodiaal (Canadian unit).
- The divestiture aligns with General Mills’ strategy to concentrate on core brands with stronger profit margins, responding to consumer trends favoring more affordable products.
- The North American yogurt business contributed approximately $1.5 billion to General Mills’ fiscal 2024 net sales. The company expects the deal to dilute adjusted earnings per share by about 3% in the first 12 months after closing.
- Yoplait has faced intense competition in the U.S. from rivals like Chobani and Danone’s Dannon brand, influencing General Mills’ decision to exit the yogurt segment in North America.
- The deal is anticipated to be finalized in 2025, marking a significant shift in the company’s portfolio and the North American yogurt industry landscape.
Fallon Jacobson – Reprinted with permission of Whatfinger News
