France calls for job commitments after Yoplait deal
PARIS (Reuters) - France called for clear signals on job protection after U.S. group General Mills Inc entered into exclusive talks to buy half of cherished yoghurt brand Yoplait.
The government stopped short of condemning the talks but said it might intervene via its sovereign fund, in a reaction which showed heightened political sensitivity at a time when President Nicolas Sarkozy is struggling with feeble approval ratings and a tough re-election fight in 2012.
"The government reaffirms its concern to preserve jobs and the future of the dairy sector in France," Finance Minister Christine Lagarde and Agriculture Minister Bruno Le Maire said in a joint statement on Friday.
"It is especially looking for shareholders to put in place a new development plan that is favorable to jobs, innovation and dairy production."
The FSI sovereign fund is examining the possibility of joining the investment in Yoplait, added the statement. The threat of FSI involvement has been raised before as a possible means of containing the influence of a foreign buyer.
Yoplait is jointly owned by private equity fund PAI Partners and French dairy co-operative Sodiaal. A PAI spokesman declined to comment, while a Sodiaal spokeswoman was unavailable.
The two shareholders earlier said they were in exclusive talks to sell half of Yoplait to General Mills, the maker of Haagen-Dazs ice cream and Cheerios cereal, for 800 million euros ($1.1 billion), allowing the company to settle a management dispute and pursue emerging markets growth.
The statement confirmed what sources close to the situation had told Reuters on Thursday.
The Yoplait deal has already seen months of tense and highly political negotiations involving members of the French government and the influential agricultural lobby, sources familiar with the deal said.
"I have never seen a deal before with as much politics," said a banker close to the deal. "This was no normal sale."
The sale of Yoplait, the second-biggest yoghurt brand after Danone, attracted multiple bids from food groups such as Mexico's Groupo Lala and Nestle, as well as a bid from Europe's largest dairy group Lactalis.
But the sale never roused the same kind of nationalist sentiment as the hostile approach for Danone by PepsiCo in 2005. At that time Prime Minister Dominique de Villepin vowed to defend French interests against a foreign takeover.
A spokesman for PAI said the company had two aims in choosing a buyer -- finding a partner to help Yoplait grow internationally and maintain its identity.
"We were selling with a logic of protection of the asset in mind. We didn't want Yoplait to get swallowed up into a major international group," the spokesman said.
General Mills won the deal in part because it has a long-running relationship with Yoplait and could pay for the transaction off its balance sheet. Sodiaal was also attracted to the idea that General Mills could use its international reach to boost sales in emerging markets, particularly India and China.
The deal will create two structures -- an entity that holds the brand rights and a company that runs the operations. That allows Sodiaal to retain an equal stake in the lucrative licensing business, while General Mills takes a 51 percent stake in the operating business.
General Mills has held the license for Yoplait yoghurt in the United States since 1977, where it has a market share of around 35 percent.
The acquisition of the Yoplait stake protects General Mills' U.S. distribution rights and eliminates the risk of a competitor edging in on that business, analysts said.
The deal also provides an attractive exit for PAI, which first invested in Yoplait in 2002, when the company was valued at about 400 million euros.
PAI has been seeking to sell a number of its more mature investments, recently agreeing to sell British tire fitter Kwik Fit to Japan's Itochu Corp.
The group is also in talks to sell mortgage broker CEP and Italian clothing retailer Gruppo Coin, people familiar with those processes said.
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