Image source: Yoplait
General Mills Inc (NYSE: GIS ) has agreed to sell its controlling interest in the European operations of Yoplait SAS to Sodiaal in exchange for full ownership of the Canadian Yoplait business and a reduced royalty rate for use of the Yoplait and Liberté brands in the US and Canada.
Under the terms of the deal announced Tuesday, Sodiaal, a leading French dairy cooperative, would acquire General Mills's 51% stake in Yoplait SAS, and General Mills would buy Sodiaal’s 49% interest in Yoplait Canada Holding Co.
Following the transaction, Yoplait SAS would operate yogurt businesses in markets including France and the UK and manage a network of 28 franchisees that manufacture and distribute Yoplait products in more than 40 countries.
Yoplait’s European business generated net sales for fiscal 2020 of $740 million.
The company's Canadian yogurt business, which generated $1.4 billion in net sales in fiscal 2020 in the US and Canada, would become a wholly owned subsidiary of General Mills.
The transaction is expected to close by the end of 2021.
According to Food Processing, General Mills’s yogurt business has underperformed for at least three years. Last October, French news outlet L'Agefi reported that the company was looking to sell its European Yoplait operations.
General Mills had bought its 51% stake in Yoplait SAS from investment firm PAI Partners for about $1.15 billion in 2011.
In a statement Tuesday, General Mills chairman and chief executive officer Jeff Harmening said, “With today’s announcement, we’re taking another step toward advancing our accelerate strategy and further reshaping our portfolio to drive profitable growth for the long term.”
“This transaction improves our growth profile, enhances our margins, and creates value for our shareholders. Additionally, it increases our focus on the brand platforms that have the greatest growth potential,” he said.
On Wednesday, General Mills reported fiscal Q3 earnings that missed analysts' estimates, posting net income of $595.7 million, or 96 cents per share. Adjusted EPS of 82 cents was shy of the FactSet consensus estimate of 84 cents,
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Source: Equities News
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