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GIS to Market Yoplait in Canada - Analyst Blog

General Mills Inc. ( GIS ) recently announced that it will sell its Yoplait brand of yogurt products in Canada under a license from Yoplait S.A.S., a company in which General Mills acquired a 51% controlling interest in July last year.

Until now, Yoplait S.A.S. held the Yoplait brand license in Canada, which will be terminated on September 1, 2012, following which General Mills Canada will sell Yoplait-branded products. The products will continue to be manufactured by Ultima Foods, the current Canadian licensee.

In July, 2011 General Mills acquired a 51% controlling interest in yogurt maker Yoplait S.A.S., and a 50% interest in a related entity that holds the worldwide Yoplait brands, from PAI Partners and Sodiaal, in a transaction valued at approximately $1.2 billion.

The acquisition of the Yoplait International business introduced General Mills to the fast-growing food category of yogurt. The transaction has boosted the revenue and operating earnings growth of the International segment of General Mills in the subsequent quarters.

Currently, Yoplait commands an impressive 28% market share in the $1.2 billion Canadian dollar yogurt market. With the acquisition of Yoplait, General Mills will capture the fifth position in the Canadian food industry.

Our Recommendation

We currently have a Neutral recommendation on General Mills. The stock carries a Zacks #3 Rank in the near term (Hold rating).

We are encouraged by the company's strong brand positioning. Further, the company's continuous effort to introduce new products in fast growing food categories can drive its long-term growth. General Mill's International segment has displayed an impressive performance. It is doing well and is on track to generate consistent revenue and profit growth.

However, we prefer to remain on the sidelines until the U.S. retail volumes improve, margin pressures from input costs subside and the macroeconomic environment recovers. We thus maintain a Neutral rating on the stock.

GENL MILLS (GIS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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