Large PE likely to bid for Chobani stake

Chobani‘s sale of a minority stake will likely attract larger buyout shops, sources said.

Interested bidders could include private equity firms such as The Blackstone Group, TPG Capital, The Carlyle Group, Madison Dearborn Partners, Kohlberg Kravis Roberts & Co, CVC Capital Partners and Apollo Global Management, banking and private equity sources said.

Such a deal likely would require any PE firm to invest at least $400 million to $600 million equity, one buyout exec said. This means large PE.

Oak Hill Capital Partners, which owns Dave & Buster’s, Earth Fare supermarkets and Caribbean Restaurants, is looking at Chobani, a banker said.

Earlier this week, Reuters reported that Chobani is looking to sell a roughly 20 percent stake, valuing the company at $2.5 billion. Bank of America is advising, Reuters said. The Wall Street Journal reported that the Chobani sale is for 15 percent, which would value the company at $5 billion.

“We’re in a great market for food brands that have trends working in their favor,” a second banking source said.

Chobani was founded in 2005 by Turkish immigrant Hamdi Ulukaya. Sales grew by more than 30 percent to over $1 billion last year, Reuters reported.

Chobani, however, is facing major competition from Danone, which sells Oikos, and General Mills, which has Yoplait, in the Greek yogurt space. Danone estimated it had 31.1 percent market share of the U.S. Greek yogurt audience, according to a November investor presentation.

“Danone is grabbing more market share and a lot of it is coming from Chobani,” the second banker said.

Danone and GM would be logical strategic buyers but antitrust issues would likely prevent any transactions, the banking source said. White Wave Foods, whose products include Silk soy and almond milk as well as Land O Lakes Half & Half, also could be interested in Chobani, sources said.

The yogurt maker had considered going public but pulled these plans, Reuters said. Chobani would likely seek an investor that could professionalize the company and prepare it for an IPO. Apollo has a strong relationship with C. Dean Metropoulos, who is known for putting companies on the fast track, the second banker said. (Metropoulos, along with Apollo, acquired the snack cake portion of Hostess Brands Inc last year.)

Executives at Chobani, White Wave, Madison Dearborn, Apollo, KKR, Blackstone and CVC declined comment. Oak Hill, TPG and Carlyle could not immediately be reached for comment.

Photo courtesy of Chobani