Mexico's Grupo Lala Is Lead Bidder for Danone's Stonyfield Farm -- Update

Mexico's Grupo Lala has emerged as the lead bidder for Stonyfield Farm Inc., the well-known U.S. maker of organic yogurt.

Talks are at an advanced stage and deal could come before the end of the month, according to people familiar with the matter. The price the big Latin American dairy company might pay couldn't be learned, but another bidder offered $850 million. Negotiations could break down, and Grupo Lala could still be outbid by a rival suitor.

Inner Mongolia Yili Industrial Group, China's largest dairy company, announced earlier this month plans to bid $850 million for Stonyfield, a subsidiary of France's Danone SA based in Londonderry, N.H.

Grupo Lala, based in Mexico City, operates 21 production plants and 159 distributions centers in Mexico, the U.S. and central America. The company offers a range of milk, yogurt, cheese and other dairy products under two main brands, Lala and Nutri Leche. Its stock is listed in Mexico and the company has a market value approaching $5 billion.

Grupo Lala's pursuit of Stonyfield comes at a time when the Mexican company and food producers more generally face increasing pressure to offer healthier foods as consumer tastes change. Grupo Lala generates a little more than 60% of its sales from traditional milk products, but the company's faster-growing segment is the one that offers yogurt, cheese and cream. In the first quarter, sales from this business increased by almost 39% from the year-earlier period while revenue from the milk business rose by 11%. A deal would also help Grupo Lala achieve its stated goal of expanding further into the U.S.

Last year, Stonyfield generated annual revenue of $370 million. The maker of organic and Greek-style yogurt was founded in 1983 and is considered one of the pioneers in feeding consumers' growing desire for simpler and more natural products.

Danone in March announced plans to sell Stonyfield to help it win regulatory approval for the proposed $10 billion purchase of organic-foods producer WhiteWave Foods Co.

Write to Ben Dummett at ben.dummett@wsj.com and Dana Mattioli at dana.mattioli@wsj.com

(END) Dow Jones Newswires

May 17, 2017 14:27 ET (18:27 GMT)