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General Mills has announced definitive agreements to sell its North American yogurt operations to Lactalis and Sodiaal, two French dairy firms, in a move valued at approximately $2.1 billion.

The transactions, expected to close in 2025, are subject to regulatory approvals and customary closing conditions.

Under the agreements, Lactalis will acquire the US yogurt business, while Sodiaal will take over operations in Canada. The divestiture includes several well-known brands such as Yoplait, Liberté, Go-Gurt, Oui, Mountain High and :ratio, along with manufacturing facilities located in Murfreesboro, Tennessee; Reed City, Michigan; and Saint-Hyacinthe, Québec.

Collectively, these operations contributed around $1.5 billion to General Mills’ fiscal 2024 net sales.

Jeff Harmening, chairman and CEO of General Mills, said: “Upon completion of these divestitures, we will have turned over nearly 30 percent of our net sales base since fiscal 2018. 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.”

He added: “We would also like to take this time to thank our North American Yogurt team members for their significant contributions,” Harmening continued. “In Lactalis and Sodiaal, we believe we’ve found the right homes for these businesses, with dairy-focused owners who are well equipped to drive success for our people and growth for these brands into the future.”

The decision to divest follows a broader trend in the food and beverage sector, where companies are increasingly streamlining operations to concentrate on core brands and emerging markets.

General Mills’ yogurt business has faced stiff competition from both established players and new entrants in the health-focused segment, which has seen a surge in demand for high-protein and low-sugar alternatives.

General Mills anticipates that the sale will be about 3% dilutive to adjusted earnings per share in the first year post-closure, excluding one-time transaction costs. The company plans to use the proceeds from the sale for share repurchases, signalling a commitment to returning value to shareholders.

In light of the transaction, General Mills is set to provide further financial insights when it reports its first-quarter results on 18 September 2024. JP Morgan acted as the exclusive financial adviser, while Cleary Gottlieb Steen & Hamilton LLP served as legal counsel for the deal.

As the yogurt market continues to evolve, with increasing consumer interest in health and wellness, the acquisition by Lactalis and Sodiaal may position these brands for enhanced growth under dairy-focused ownership.

Both companies have established track records in the dairy sector, suggesting potential for innovation and expansion in the North American market.

This divestiture marks a significant shift for General Mills, which generated $20 billion in net sales in fiscal 2024 and has been actively refining its brand portfolio to align with changing consumer preferences and market dynamics.

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