Is Chobani in the Thick of Negotiations to Sell a Minority Stake?
Chobani, the company that has made a Greek yogurt believer out of almost everybody, is looking to sell a minority stake in a deal that could value the company at $2.5 billion, Reuters reported Tuesday. Sources say that the New Berlin, New York-based company is working with Bank of America Corp. (NYSE:BAC) to secure a deal with potentially interested consumer companies and and private equity firms as it considers selling roughly 20 percent.
According to Reuters, Chobani first got its start when it commenced operations at a former Kraft Food (NASDAQ:KRFT) yogurt plant in South Edmeston, New York. Now, the company that was founded by Turkish immigrant Hamdi Ulakaya in 2005 has evolved into one of the top-selling Greek yogurt brands in the United States, and it has enjoyed popularity in a new market that until recently, was left largely empty. Though yogurt has long been a popular food choice for consumers, it wasn’t until recently that Greek yogurt made its mark on the American consumer base. Since then, the dairy product’s demand has only grown, and Reuters reports that Chobani’s sales have grown more than 30 percent in 2013 to over $1 billion.
Earlier in the year, there were reports that Chobani was considering the possibility of pursuing an initial public offering, but it is now becoming more clear that the New York-based company has switched gears amid growing competition from other rivals, including Fage and Oikos. USA Today reported Tuesday that Chobani has once again denied any reports that it is putting out an IPO anytime soon, despite other publications reporting otherwise. And that’s where reports of its latest stake sales come in.
Though Chobani has realized considerable success in recent years, it also has suffered a few setbacks as of late that have made its latest minority stake sale rumors all the more significant. Reuters said Tuesday that the company suffered a blow in September, when it was forced to recall moldy cups of its Greek yogurt after customers complained, and the waves of reported illnesses that resulted from the runny yogurt didn’t settle until later.
In addition, two months later, in December, Chobani also took a hit to its business when popular retailer Whole Foods (NYSE:WFM) made the announcement that it would no longer sell Chobani yogurts on account of the dairy products containing genetically modified organisms, or GMOs. Whole Foods has committed to going GMO-free in the future, and although Chobani doesn’t expect its business to suffer as a result of the terminated partnership — its supermarket business represents less than 0.5 percent of its retail distribution — Whole Foods’ consumer base is still a loyal one, and many could easily heed the retailer’s warnings.
But in fairness to Chobani, it does continue to make $1 billion in revenues and have a 18.9 percent share of the yogurt market — one that is now worth $7.4 billion, according to Reuters. It’ll be interesting to see if the company’s latest rumors ring true, and if they do, what the sale will mean for Chobani’s business.