Chobani shoots down offer by Pepsico

By Staff Writer

Feb 08, 2016 05:46 AM EST

Chobani, founded by billionaire Hamdi Ulukaya, recently turned down Pepsico's offer. The beverage giant had been eager to buy out a stake in the Greek yogurt maker, but their demands evidently did not go down well with the billionaire.

Last year, Chobani roped in Goldman Sachs to seek a suitable partner who would help facilitate and expand distribution and production. However, when Pepsico approached the company, their offer was shot down, "effectively ending deal discussions", according to Michael Gonda, a spokesman for the Norwich, New York-based yogurt company. Pepsico remained silent on this matter.

According to Reuters, the main issue was Pepsico has wanted to buy out the majority stake in the company while Ulukaya was ready to sell only the minority shares. Neither party wanted to budge from their decision, as Chobani strongly feels that remaining independent is the key to their success.  

When Chobani hired Goldman, the company was trying to overcome its troubles due to its rapid growth. One such expansion plans included a huge yogurt plant in Idaho. A troubled Chobani lost $115 million in the latter half of 2013, mainly due to production issues, while it saw over $1 billion of sales over the last five years. These issues have finally been dealt with, and the company is now ready to explore opportunities on its own. For instance, it plans to expand the Flip line of products and foray into the Mexican market.

As per Nasdaq, a Chobani executive said, "The relationship with Goldman Sachs remains, and Chobani will continue to be open to exploring and hearing options to fuel its growth, but independence remains an important asset to the company."

Pepsico's interest in acquiring Chobani could have stemmed from the fact that it has just ended its association with a yogurt business in the US, and now is probably seeking a new partner to tap the growing US yogurt market. Bloomberg represents Pablo Zuanic, an analyst at Susquehanna International Group, said the same thing, "In the crowded U.S. yogurt market, PepsiCo needed an established yogurt player as a partner."

In the meanwhile, the sough-after Greek company also received offers from Pepsico's arch rival, Coca Cola Co. However, this deal fell through as well as Coca Cola backed out saying this was not the best fit for the company.

Now the Greek yogurt maker is determined to make a resounding come-back on its own. It has taken its time with the process and conducted due diligences.  Their spokesperson concluded, "In the end, given our strong performance, we decided to fund our new growth initiatives ourselves while keeping our independence, which is important to us."

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