DEALTALK-Yoplait sale to draw plenty of suitors

(For more Reuters Dealtalk stories, click on [DEALTALK/])

* Yoplait has appeal for General Mills, Nestle, Lactalis

* Emerging market players, private equity also looking

* Expressions of interest expected in January, possibly Dec

By Dominique Vidalon and Victoria Howley

PARIS/LONDON, Nov 26 (BestGrowthStock) – Global food companies are
set to square up against emerging market buyers and private
equity players to buy half of Yoplait, the world’s
second-largest yoghurt maker after French peer Danone (DANO.PA: ).

General Mills (GIS.N: ), Nestle (NESN.VX: ) and Lactalis,
Europe’s largest dairy group, all have sound strategic reasons
to pursue the maker of Petits Filous yoghurts and Yop drinking
yoghurt, valued at 1.5 billion euros ($2 billion) by its CEO
Lucien Fa in a Reuters interview. [ID:nLDE6A71G3]

Lactalis — whose unsolicited 1.4 billion euro ($1.9
billion) bid for the whole of Yoplait was rejected last week —
has made no secret it plans to still participate in the sale.
[ID:LDE6AM1DG]

Yoplait’s owners — French private equity group PAI and
dairy cooperative Sodiaal — have rejected the Lactalis bid as
too low. Sources say Sodiaal is not so keen to sell as PAI, and
any bidder is therefore unlikely to land full control.

Bankers say Yoplait is a clear target for General Mills, the
maker of Cheerios cereal and Haagen-Dazs ice cream that has held
Yoplait’s U.S. franchise since 1977 — a lucrative license which
analysts say General Mills is keen to prevent from falling into
rival hands.

“General Mills is the front runner: it needs to be able to
retain the U.S license rights,” said Jon Cox, analyst at Kepler
Capital Markets.

Yoplait makes nearly half of its 4.5 billion euros in global
sales in North America. It is the number one brand in the United
States with a 35 percent market share, ahead of Danone’s 30
percent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a factbox on Yoplait please double click on [ID:nLDE6AP15Y] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

BRAND REPUTATION

Nestle, the world’s biggest food group, could use Yoplait to
beef up its position in fresh dairy, fitting in with the
company’s focus on nutrition and wellbeing. The Swiss group has
just 3.5 percent of the global fresh dairy market against
Yoplait’s 7 percent and Danone’s 21 percent.

“Nestle could easily afford 700 million euros for the 50
percent stake and such a deal would have no material impact on
key return ratios,” Kepler’s Cox said.

Nestle has said it preferred share buyback programmes and
organic growth to acquisitions, but in January it bought Kraft’s
(KFT.N: ) frozen pizza business for $3.7 billion.

Yoplait also has appeal for emerging market players such as
China’s Mengniu Dairy (2319.HK: ) or Mexico’s Grupo Lala that may
want to gain access to more affluent populations in North
America and Europe to boost margins, analysts said.

“The purchase of a brand with the reputation and scope of
Yoplait would grant them access to a truly global market place,”
said Euromonitor analyst Ildiko Szalai.

Grupo Lala last year bought Dairy Farmers of America and
Mengniu Dairy has been diversifying its offerings from long-life
UHT milk to other dairy categories. Mengniu is teaming up with
private equity firm KKR for a potential bid, sources said,.

Lion Capital and BC Partners are among the other private
equity groups tipped to take a look at Yoplait.

BC Partners, which has held a stake in mozzarella producer
Galbani, could be a credible option if Yoplait’s owners have to
choose between financial buyers, said analyst Pierre Tegner at
brokerage Oddo.

Either way, matters could be about to come to a head. PAI
expects to receive expressions of interest for its 50 percent
stake in Yoplait in January, or possibly even December, people
familiar with the matter said.

“The approach from Lactalis may encourage other prospective
bidders to show their hand earlier than they were planning,” one
of the people said.
(Additional reporting by Silke Koltrowitz in Zurich; Editing by
David Holmes)
($1=.7540 Euro)

DEALTALK-Yoplait sale to draw plenty of suitors