General Mills is planning to sell its North American yogurt business to French dairy companies Lactalis and Sodiaal in a US$2.1 billion cash deal. The move is touted as a “portfolio reshaping” strategy to allow the Cheerios maker to focus on brands that have more substantial margins.

Upon finalization of the transaction, Lactalis will acquire the US business, while Sodiaal will take over the Canadian firm. The two businesses will operate independently.

The deal propels General Mills’ “accelerate strategy,” and once completed, the company “will have turned over nearly 30% of our net sales base since fiscal 2018,” according to Chairman and CEO Jeff Harmening.

“By efficiently managing our portfolio and sharpening our focus on our global platforms and local gem brands that have stronger growth prospects and more attractive margins, we will be in a better position to drive top-tier shareholder returns over the long term.”

The Golden Valley, Minnesota-based company expects the transactions to close next year, depending on regulatory approvals and other customary closing conditions.

Divestiture impact

The dual divestiture encompasses the US and Canada operations of various yogurt brands such as Yoplait, Liberté, Go-Gurt, Oui, Mountain High and :ratio. It also includes General Mills’ US-based manufacturing facilities in Murfreesboro in Tennessee, Reed City in Michigan and Saint-Hyacinthe in Canada.

The divestitures encompass the US and Canada operations of Yoplait, Liberté, Go-Gurt, Oui, Mountain High and :ratio yogurt brands.Trades in its North American yogurt firm collectively contributed approximately US$1.5 billion to the company’s fiscal 2024 net sales.

In 2011, General Mills acquired a 51% stake worth US$1.2 billion in Yoplait from PAI Partners and Sodiaal, followed by the sale of its European operations to Sodiaal in 2021. The yogurt brand is currently facing competition in the US from fellow category players Chobani and Danone’s Dannon brand.

Harmening believes that Lactalis and Sodiaal, which are dairy-focused owners, “are well equipped to drive success for our people and growth for these brands into the future.”

The way ahead

Following the divestitures, General Mills anticipates the combined transactions will be “approximately 3% dilutive to adjusted earnings per share in the first 12 months after the close, excluding transaction costs and other one-time impacts.” The company expects to use the net transaction proceeds for share repurchases.

General Mills will provide additional details about the potential financial impact of the transactions in its first-quarter results on September 18.

In 2024, the company reported net sales of US$20 billion, with its share of non-consolidated joint venture net sales totaling US$1 billion.

Lactalis Ingredients

Lactalis Ingredients is a global producer and supplier of dairy ingredients, active in more than 100 countries worldwide. We strive to bring together the natural goodness of milk, years of experience and cutting-edge technology to deliver the very best ingredients. We seek out the best possible nutrition and aim to offer innovative solutions with a complete range covering all dairy categories from whey and milk powders to specialised dairy proteins, industrial butters and cheese ingredients.

Lactalis Ingredients brings together the natural goodness of milk, generations of experience and cutting-edge technology to deliver the very best ingredients:

• Highly functional and nutritional whey powders and lactose that provide essential nutrients and functional properties ranging from heat stability to high fluidity.

• All offerings in our extensive range of dairy powders provide a clean dairy flavour, consistent nutrient content and excellent solubility.

• Specialty proteins, such as native whey proteins are premium offerings designed to support consumers, regardless of age or health condition. We also offer high quality whey and milk proteins, a range of heat stable whey proteins, adapted to nutritional or tasty applications.

• Using selected cream, we provide technical butters and anhydrous milk fat which help to achieve the desired functionality, plasticity, or texture in various applications.

• Building upon the Group’s expertise, we have developed a range of industrial cheeses  adapted to the specific needs of food applications.

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