DealZone

Deals wrap: Yoplait to split a yogurt with General Mills

March 18, 2011

General Mills cereals are displayed on a kitchen counter in Golden, Colorado December 17, 2009. REUTERS/Rick Wilking

After months of tense negotiations that involved members of the French government, management disputes and influence from an agricultural lobby General Mills is set to pay $1.12 billion for private equity fund PAI Partners half of the Yoplait yogurt brand.

The General Mills bid was attractive for several reasons. It has a long standing relationship with Yoplait, holding the license for the companies yogurt in the United States since 1977. General Mills was also able to pay for the transaction off its balance sheet. Sodiaal, which controls the other half of Yoplait, was also attracted to the idea that General Mills could use its international reach to boost sales in emerging markets, particularly India and China.

For its part General Mills protects its U.S. distribution rights and eliminates the risk of a competitor edging in on that business. The Deal Journal has some early market reaction.

News that Groupon could be valued as high as $25 billion is being met with skepticism.

A source familiar with the matter told Reuters the site was unlikely to command such a lofty valuation so shortly after it turned down a $6 billion buyout offer from Google in December.

“There’s no way that there could have been a $19 billion difference in value at the time anyway,” the source said.

Jeffrey Grau, a principal analyst with eMarketer said Groupon was already starting to see competition from rival sites and now that social media giant Facebook is planning new features to capitalize on bargain hunters, Groupon’s single detention could become troublesome.

“The interest is going to fade in what Groupon offers,” Grau said. “They are basically one-trick ponies.”

Finally, the Japan crisis and uneasy markets have reeked havoc on potential IPOs. Hong Kong billionaire Li Ka-shing’s Hutchison Port units fell as much as 6.9 percent on their Singapore debut.

Denmark’s ISS pulled its planned $2.8 billion initial public offering on Thursday, joining a host of recent high-profile withdrawals, including Perennial China Retail Trust’s Singapore IPO.

This makes the expected Glencore IPO all the more dicey. Not only will the recent string of bad luck IPOs be in focus, but the political risk associated with its raw materials business will be in sharp focus as investors grapple with how to value the giant commodities trader.

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