General Mills, Inc. (NYSE:GIS) announced that it has signed definitive agreements to sell its North American yogurt business to Lactalis and Sodiaal, leading French dairy companies, for a total of $2.1 billion.

Under the agreements, Lactalis will acquire the U.S. yogurt business, while Sodiaal will take over the Canadian yogurt business. The transactions are anticipated to be completed by 2025, pending regulatory approvals and other standard closing conditions.

General Mills expects the combined transactions to be about 3 percent dilutive to adjusted earnings per share in the first year post-close, excluding transaction costs and one-time impacts. The company plans to use the net proceeds from the sales for share repurchases.

In a May note, Bloomberg Intelligence analysts Jennifer Bartashus and Jibril Lawal cited increased competition from Danone (OTC:DANOY) and Chobani Inc., coupled with limited market penetration, as factors prompting discussions about exiting the U.S. yogurt market.

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General Mills is also turning its portfolio to growth elements such as premium pet food and organic snacks, the report added.

In 2021, General Mills transferred its European Yoplait operations to Sodiaal in exchange for the Canadian business and reduced royalty rates for the Yoplait and Liberte brands in the U.S. and Canada.

According to Bartashus and Lawal, General Mills' U.S. retail yogurt business alone generated $1.4 billion in sales in the 12 months leading up to May 19, with Yoplait making up 87% of that total, Bloomberg added.

General Mills plans to provide additional details about the potential financial impact of the transactions when it reports its first-quarter results on September 18, 2024.

According to Benzinga Pro, GIS stock has gained over 10% in the past year. Investors can gain exposure to the stock via Invesco Food & Beverage ETF (NYSE:PBJ) and First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG).

Price Action: GIS shares are trading lower by 0.88% to $72.48 at last check Thursday.

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