General Mills close to buying PAI’s stake in Yoplait

General Mills, one of the world's largest food companies is close to buying private equity firm PAI Partners' stake in French dairy company Yoplait, in a deal that values it at around €1.6 billion ($2.25 billion), according to a report from Bloomberg yesterday .

Billancourt-based Yoplait, the world's second-largest brand in fresh dairy products after Groupe Danone SA, is 50-per cent owned by PAI and the remaining by French cooperative dairy group Sodiaal.

PAI had acquired the stake from Sodiaal in 2002 for around €400 million and had said in July last year that it would sell its interest if it received good offers for its stake.

Apart from General Mills, other interested bidders in the fray for Yoplait were Nestle SA, Mexico's Grupo Lala and dairy company Groupe Lactalis, Bright Foods of China, private equity firms Lion Capital, Bain Capital and AXA Private Equity.

Minneapolis, Minnesota-based General Mills has been a distributor of Yoplait products in the US market since the past 30 years.
 
The deal may also put an end to a legal battle with Yoplait's parent group Sodima, which had notified General Mills in September 2010 that it would renegotiate the royalty terms of their 30-year agreement.

General Mills, which owns more than 100 brands in the US including Cheerios cereals and Pillsbury cookies, is a Fortune 500 company generating annual sales of $16 billion. 

With products in more than 100 global markets, almost 70 per cent of its sales come from the US retail products, while its international business contributes $2.7 billion in sales.

With a 9-per cent global market share, Yoplait sells its products through 29 franchises in over 70 countries and had 2010 sales of €3.5 billion.