General Mills, the company behind breakfast staples like Cocoa Puffs and Cheerios, is considering the sale of its North American yogurt business, which includes the Yoplait brand, for over $2 billion, Reuters reports.

According to sources familiar with the matter, General Mills is collaborating with investment bank JPMorgan Chase to explore potential buyers, including rival snack food makers and private equity firms. 

The company aims to achieve a valuation of nearly ten times the yogurt business's annual earnings before interest, taxes, depreciation, and amortization, which stands at around $250 million.

General Mills' Yogurt Business

In 2011, General Mills acquired a 51% stake in Yoplait, valued at $1.2 billion. In 2021, General Mills sold Yoplait's European operations, highlighting a shift in focus to core markets.

Sources told Reuters that with strong competition from industry leaders like Chobani and Danone's Dannon brand, General Mills sees the remaining yogurt assets as non-core to its current strategy.

This move also aligns with broader trends in the food industry. Competitors like Campbell Soup and Danone have been actively considering divestments in their yogurt units, indicating a dynamic market landscape.

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This potential sale comes amid a challenging landscape for General Mills. The company's shares have decreased about 19% over the past year, valuing the company at approximately $40 billion. 

Sales fell 1% to $5.09 billion in the third quarter, down from $5.13 billion the previous quarter. Organic net sales also fell 1% in the quarter. 

"The biggest challenge, obviously, this year has been with growth," said CEO Jeffrey Harmening during a March 20 conference call.

Despite these challenges, General Mills recently exceeded market expectations for third-quarter sales and profit, thanks to increased prices for its breakfast cereals, snack bars, and pet food products.

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