General Mills Inc. appears to be the winning bidder for a 50 percent stake in the Yoplait brand, reportedly shelling out $2.2 billion for the privilege.
While General Mills has owned the U.S. licensing rights to Yoplait since 1977, the global brand is co-owned by the French dairy cooperative Sodiaal and PAI Partners, a French private equity group. PAI put its half interest up for sale several months ago, and several major global food companies have shown interest in buying it.
The Wall Street Journal, Bloomberg News, citing unnamed sources, and European newspapers reported Thursday that General Mills is set to buy PAI Partners' stake. Some publications have reported that General Mills will buy an additional 1 percent of Yoplait from Sodiaal, giving it controlling interest, according to a research note by Janney Capital Markets analyst Jonathan Feeney.
Golden Valley-based General Mills did not respond to calls for comment Thursday.
The $2.2 billion price tag would be "a bit higher than expected, but it settles an ongoing question mark" for General Mills. That question mark is a dispute between General Mills and Sodima, the licensing arm of Sodiaal. In September, Sodima tried to terminate its licensing contract with General Mills, after it failed to renegotiate the royalty rate.
General Mills declared that the licensing agreement doesn't have language that would allow Sodima to terminate it or renegotiate it. General Mills took the dispute with Sodima to an international commerce group that specializes in arbitration.
General Mills had maintained that its U.S. licensing rights were "sacrosanct" in the event that PAI's Yoplait stake was sold to a competitor, Feeney wrote. "But some legal wrangling by Yoplait to the contrary clouded that interpretation. It stands to reason General Mills took that into consideration in placing this bid," Feeney wrote.
Erin Swanson, a stock analyst at Morningstar Inc., said that General Mills' motivation in a deal "would be to protect the ownership position of Yoplait in the U.S."
