Syracuse.com have reported that Fort Worth, Texas headquartered TPG Capital are to make a $750million investment into New York based Chobani, the United States’ market leader in the fast growing Greek yoghurt market. Chobani had recently announced a series of ambitious expansion plans. The main basis of these plans was:
• To expand their market exposure to capitalise on the increasing demand for Greek yoghurt in the Asian and Latin American geographical areas.
• To launch new products to offer a fuller, wider range to complement the yoghurt they are already selling.
While TPG Capital are thought to have been negotiating with Chobani for some time, it is thought the company was in talks with at least six other private equity houses. TPG Capital have made investments into fast growing businesses a key part of their business plan in recent years, and such deals are a clear demonstration of their continued commitment to this.
The deal will see TPG Capital seated on the board of directors, although it was not disclosed whether an existing member of the TPG Capital team would be doing this or whether they were looking to source an industry expert to come on board to carry out this function.
According to the New York Times Dealbook, this investment is actually the form of a loan. However, TPG Capital will secure “warrants that may allow it to obtain an equity stake in Chobani of as much as 35 percent.”
Were TPG Capital to secure such a large percentage of the business, this would represent a great deal for the firm considering Chobani are estimated to have a value of $5billion; although the full terms to which should an acquisition would be subject to are unknown, they are believed to be heavily linked to business performance.
Dealbook reports that the company preferred a loan rather than a traditional investment so that there was no splitting or dilution of equity.
Hamdi Ulukaya, the founder and CEO of Chobani, who is staying with the company to continue managing the business, said in a statement carried on the Dealbook site, “Chobani has experienced tremendous growth and leads one of the most exciting aisles in the supermarket. This investment gives us additional resources to build on our momentum, fund our exciting new innovations and reach new people.” It is easy to see why Chobani appears to be an attractive investment.
Revenues surpassed $1billion for the first time in 2013, and the new products the business is looking to introduce are expected to grow sales rather than see consumers swap their Chobani yoghurt for a dessert or an oat based breakfast. James Coulter of TPG said in the same statement, “Hamdi and the team at Chobani have in seven years turned the vision of bringing a quality, nutritious Greek yogurt to America into a highly successful business.
We look forward to Chobani’s future growth and expansion of the brand.” Chobani had previously been known to be looking at the possibility of undertaking an IPO in 2015. It is unknown whether this deal will change plans related to this.