Chobani, the Greek Yogurt Maker, Reclaims Control of Its Finances

Chobani, the Greek Yogurt Maker, Reclaims Control of Its Finances

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The Greek yogurt maker Chobani is parting ways with TPG — the private equity firm that gave the company a financial lifeline in 2014 — and bringing on a new investor, the Healthcare of Ontario Pension Plan.

TPG, which lent Chobani $750 million four years ago through its private equity and credit funds and received warrants that could have converted into a 25 to 35 percent stake in the company, will leave with a handsome profit but no remaining stake in the yogurt maker.

The Healthcare of Ontario Pension Plan (Hoopp Capital Partners) will receive a 20 percent position in Chobani. Financial terms of the deal were not disclosed.

Chobani will emerge with a long-term investor, a simplified balance sheet and more control over its own destiny.

“It’s about long-term thinking, having a long-term partner and getting more control back,” Chobani’s founder, Hamdi Ulukaya, said in a recent interview. “That’s the heart of it.”

Mr. Ulukaya will also gain a path to reclaim near-total control of the company he founded in 2007. Under the terms of the deal, Chobani can buy back about half of Hoopp’s equity over time.

Should that occur, Mr. Ulukaya, the company and its more than 2,000 employees would control about 90 percent of Chobani’s stock, an unusual dynamic for such a large company.

“We’re trying to protect what we’ve built, and make sure we’re going in the right direction,” Mr. Ulukaya said.

TPG’s exit from Chobani closes a deal that was profitable for the private equity firm, but onerous, if necessary, for the yogurt maker.

In 2014, Chobani was in urgent need of cash. The company was growing fast, expenses were rising and a new plant in Twin Falls, Idaho, was consuming capital.

“We had to build the plants, build warehouses, build sales floors and build a quality team,” Mr. Ulukaya said. “That required pure capital.”

Chobani ultimately accepted the loan from TPG, and issued warrants to the private equity firm. But because of interest payments, Chobani’s debt to TPG rose to $900 million within two years.

By 2016, Chobani had begun to restructure its debt load and pay back its loan from TPG at a steep price. Chobani finished paying back its loan to TPG last year.

TPG still owned warrants that could have converted into more than one-third of Chobani equity, however. But Chobani will use the investment from Hoopp to buy back those warrants from TPG, leaving the private equity firm with no ties to the company.

“The value that they would get for their investment is significant at any level that you can think of,” Mr. Ulukaya said. “The company’s going forward, and we need a long-term thinker next to us.”

Chobani seems to have found that in Hoopp, according to Mr. Ulukaya.

“When you want long-term thinking and independence, you pretty much know what the world looks like," he said. “No strategics because that would not be acceptable for staying independent. Short-term thinking financial institutions were out. So only ones left were special funds and family offices.”

Jim Walker, managing partner at the pension plan, said in a statement that “Chobani is truly one of those unique companies and investment opportunities that seems to defy all odds: coming out of nowhere, lifting up its communities and driving exceptional long-term value and performance.”

Mr. Ulukaya, a Turkish immigrant of Kurdish descent, founded Chobani in 2007 in upstate New York. At the time, Greek yogurt represented less than 1 percent of yogurt sales in the United States.

But Chobani was a hit and grew quickly. Today, over half of yogurt sales in the United States are Greek yogurt and the company has annual revenue of about $1.5 billion, making it the second-largest overall yogurt manufacturer in the country, behind Dannon.

In recent years, the company has introduced new products, including yogurt-based drinks and packs that let consumers mix nuts and chocolate chunks into their yogurt.

In 2016, Mr. Ulukaya gave away about 10 percent of the company to employees. Chobani offers men and women generous parental leave, as well: up to six weeks, at full pay, for all full-time employees.

Chobani has also continued to hire refugees from Myanmar, Thailand and Somalia, among other countries — a practice that he started in 2010, and one that made the company the target of ire from the so-called alt-right during the 2016 election season.

“A company should behave in a way that solves some of the problems that society is dealing with,” Mr. Ulukaya said. “Chobani has demonstrated this for the last 10 years.”

Mr. Ulukaya said that there were no plans to take the company public, and that the financial restructuring was not part of preparation for an initial public offering.

“There is no financial reason to I.P.O.,” he said. “This company is comfortably in a place to innovate and grow.”

Mr. Ulukaya hinted that Chobani could introduce other dairy products soon.

“We have big dreams,” he said. “We have the innovation to support those kinds of dreams, and we have built the platform to be able to do that independently.”

A version of this article appears in print on , on Page B3 of the New York edition with the headline: Chobani, With New Investor on Board, Sees Path to Financial Control. Order Reprints | Today’s Paper | Subscribe

(Original source)

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