M&A

Pepsi, Coke Vying for Stake in Chobani

The Greek-yogurt maker is in talks with the soft drinks companies to sell a minority stake, including warrants owned by private equity firm TPG Cap...
Matthew HellerOctober 14, 2015

PepsiCo and Coca-Cola are reportedly competing to make a strategic investment in Chobani that would help the Greek yogurt maker expand and enter new product categories.

According to Reuters, Chobani is in talks with the soft drinks companies to sell a minority stake, including warrants owned by private equity firm TPG Capital. A deal could value Chobani at as much as $3 billion, including debt, Reuters said, citing people familiar with the matter.

“The negotiations illustrate how soft drink giants are making a push to diversify beyond the slow-growth carbonated beverage sector into the U.S. consumer market’s faster-growing healthy lifestyle segment,” Reuters wrote.

Pepsi’s snack category includes “better for you” products such as Quaker Oats, as well as Frito-Lay chips and other offerings, while Coca-Cola has acquired minority stakes in coffee company Keurig Green Mountain, energy drink Monster Beverage, and juice brand Suja Life.

Reuters said other food and consumer companies are also in talks to invest in Chobani, which was founded in 2005 by Turkish immigrant Hamdi Ulukaya, its majority owner and chief executive.

“While its yogurt has become one of the top-selling Greek brands in the United States, Chobani has also experienced some growing pains,” Reuters said, noting that TPG loaned $750 million to the company last year to help finance a turnaround.

Chobani captured huge market share with its thicker, creamier Greek-style yogurt, but then had to deal with a costly recall after opening a massive $450 million plant in Twin Falls, Idaho, in 2012, CNBC reported.

The company is gaining market share again, due in part to the success of its Flip product, a combination of yogurt with flavors such as peanut butter and coffee.

“Chobani is looking for a strategic investor to help expand its supply chain, distribution, manufacturing base, and geographic footprint for its popular yogurts like Flip,” Reuters said.

The Chobani warrants owned by TPG account for between 10%  and 20% of the yogurt maker’s equity depending on its financial performance.

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