“It’s exactly the time to do this,” said Hamdi Ulukaya, CEO of Greek yogurt giant Chobani, as he informed his 2,000 employees that they will each receive shares in the billion-dollar-plus yogurt company if it goes public or is sold.
The stake to be divided among the employees amounts to 10% of the company, which sold more than $1.6bn worth of yogurt last year and has been valued between $3bn and $5bn. Some longtime employees are likely to receive seven-figure stakes, making them yogurt millionaires.
My lifelong dream is now a reality: sharing @Chobani with the 2,000 people who helped create it pic.twitter.com/GxxfuJdLSW
— Hamdi Ulukaya (@hamdiulukaya) April 26, 2016
In a meeting at Chobani’s offices on Tuesday morning, Ulukaya praised the company staff. “Without every single one of you, this couldn’t have been done,” he said. Chobani has grown by leaps and bounds in the 11 years since Ulukaya bought a South Edmeston, New York, yogurt factory that Kraft Foods had planned to close. The company brought in $3m in sales its first year.
The company has been searching for a strategic investor for some months, with abortive overtures from PepsiCo and Coca-Cola. According to the New York Times, which first reported news of the employee share giveaway, TPG, which leant Chobani $750m, is seeking to buy 20% or more of the company.
But because of the way the employee offer is structured, TPG’s stake will be taken out of the remaining 90% of Chobani, meaning that Ulukaya has effectively diluted the stock of any future shareholder in favor of Chobani’s own workers, who will receive shares based on seniority.
Exotic yogurt may have peaked: Chobani saw sales dip for the first time at the end of last year. Just weeks earlier, industry trade publication the Dairy Reporter predicted that the newly popular Greek yogurt sector could reach $4bn by 2019 if the trend didn’t falter before then. Greek yogurt now makes up about half of US yogurt sales.
TPG bailed the company out of a tight spot after it built a million-square-foot yogurt processing plant in Idaho and found itself unable to cope with its newfound size. When TPG gave Chobani the $750m, it took repayment in the form of warrants it could convert into the equity it currently seeks, a source told Fortune.
