General Mills exchanges shares in Yoplait yogurt with Sodiaal – each party refocussing on its domestic core markets
An update on the dairy market
Davide Milano, Jonathan Sherman and Philippe Hermant comment on a sizeable transaction announced by two key players in the sector: Sodiaal and General Mills. This transaction is a clear example of how big corporates are continuously looking to reshape and rationalize their brand porfolios focusing on their core markets and regions; and is a clear indicator of what may happen in other countries with a similar focus on the dairy business
An interesting transaction is taking place in the dairy industry between two giants based in USA and France. General Mills and Sodiaal have just signed an agreement that provides for:
- General Mills to divest its 51% stake into Yoplait France in favor of its partner Sodiaal, that will become sole owner of Yoplait France. The European business of Yoplait is rumored to generate ca. US$740m in 2020;
- Sodiaal in its turn shall divest its 49% stake into the Canadian business of Yoplait in favor of General Mills, that will become sole owner of Yoplait Canada. Yoplait Canada is rumored to generate US$290m in 2020, and together with the Yoplait North America business accounted for a combined turnover of US$1.4bn in 2020;
- General Mills shall be allowed to use a reduced-royalty model for the brands Yoplait and Liberté in North America.
The closing of the transaction is expected to take place in late 2021.
Back in 2011 General Mills acquired 51% of Yoplait France from the private equity Fund PAI Partners for a total valuation of ca. US$1.15bn, implying ca. x2.3 turnover. At that time the remaining stake was retained by Sodiaal.
The players involved
General Mills is a giant US branded food company generating US$17.6bn (+5% compared to the previous year) and more than US$3.5bn EBITDA. Headquartered in Minneapolis General Mills sells its products (cereals, snacks, soups, yogurt, bars, desserts, etc) into all continents. Most recent valuations shows General Mills traded at ca. x11 EBITDA and x2,6 turnover.
Sodiaal is a renowned French cooperative with more than 9.000 employees and 70 production sites.
Yoplait is one of the biggest branded yogurt businesses in the world, created by the French cooperative itself back in 1965. The European Yoplait business addresses many markets such as France, Slovakia, the Czech Republic, the UK and Sweden plus a network of 28 franchisees, increasing the Yoplait reach to more than 40 countries.
Comments from our experts
Davide Milano, Oaklins cheese specialist says: “As also confirmed by the respective CEOs, such a transaction is a clear example of how big corporates are continuously looking to reshape and rationalize their brand porfolios focusing on their core markets and regions. Such an exchange in shares and consequently the focussing of General Mills into the Northern American market – and Sodiaal into its domestic market– is quite representative of such a strategy."
Together with the acquisition of Agropur’s Canadian yogurt business by Lactalis at the beginning of March, General Mills now becoming sole owner of Yoplait Canada through this latest transaction further consolidates an important fresh dairy subsector in Canada. Moreover, these transactions follow on the heels of Ireland’s Kerry itself taking a significant position in the Canadian market for probiotics and fermented products through acquisition in late 2020. As US and Europe-based multinationals continue to aggressively pursue strategic M&A opportunities in the attractive and growing Canadian market for value-added dairy products, Oaklins is uniquely well-suited to advise on these cross-border transactions through our international platform of 70 offices around the globe, combined with a worldwide team of highly-skilled industry specialists and a network of strong relationships with many key players.JONATHAN SHERMAN, OAKLINS EASTERN CANADA
Philippe Hermant, Oaklins food & beverage specialist in France says: “We are witnessing a lot of activity in France, one of the key countries in the dairy sector. Last week alone, three French groups were involved in two key transactions, one being the above mentioned recovery of the Yoplait yoghurt brand for Europe by the Sodiaal cooperative (with €5 billion in sales, including 2.5 billion for consumer products such as milk, cheese and yogurts) from General Mills. In addition to that, we reported the unwinding of a very old link between Lactalis (with €20 billion in sales) and BEL (with €3.5 billion in sales) through a spectacular exchange of assets between the Dutch cheese brand Leerdammer and the 24% of BEL shares held by the Lactalis Group.
These sizeable transactions should lead these groups to pursue very divergent strategies:
- a very local policy serving its 17,000 members by Sodiaal
- BEL will take advantage of its regained independence to accentuate its diversification away from cheese towards plant-based products
- the world leader in cheese Lactalis will pursue the policy of globalizing its activity through external growth
This could be a clear indicator of what will happen in other countries with a clear focus on the dairy business."
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