General Mills Inc. (GIS) has won a 50% stake in world’s number two dairy company, Yoplait, for $2.2 billion. The Minneapolis, Minnesota-based retail giant had to fight a tough battle with Switzerland’s Nestle and China’s Bright Food Group who were in the race for the buyout.
While China’s Bright Dairy & Food Co reportedly placed the highest offer for Yoplait, it was unable to get final approval from the Chinese authorities.
General Mills is buying Yoplait from Private equity fund PAI Partners. The French cooperative dairy group Sodiaal, will own the other half of the second-largest yogurt maker Yoplait, after Danone SA.
Yoplait is present in 50 countries and has global sales of approximately €4.0 billion. At the time, Yoplait was generating earnings before interest, tax, depreciation and amortization of €51m.
The acquisition comes at a time when General Mills was in jeopardy and about to lose its license to the Yoplait brand. It has operated Yoplait’s U.S. franchise since 1977, but was about to lose it in 2012 due to the lapse of the contract.
General Mills also acquired natural yogurt brand Mountain High from Dean Foods in November, 2010 that helped the company to double the size of its large-size yogurts business.
General Mills is a leading global manufacturer of consumer products and possesses a formidable portfolio of well-established brands. The company reported results for the second quarter of fiscal 2011 on December 16, 2010. For the quarter, adjusted earnings decreased 1.3% to $0.76 a share from the year ago period. Total revenue for the reported quarter grew only marginally by 1% year over year to $4.07 billion.
General Millswhich faces stiff competition from Kellogg Company (K) and Seneca Foods Corp. (SENEA) currently holds a Zacks #3 Rank. On a long-term basis, the company retains a Neutral rating on the stock, with a short-term Hold rating.
GENL MILLS (GIS): Free Stock Analysis Report
KELLOGG CO (K): Free Stock Analysis Report
SENECA FOODS-A (SENEA): Free Stock Analysis Report
Zacks Investment Research
