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Chobani Grows Up: Big Money In, Founder Out as CEO

Chobani has been one of very few large food companies to be wholly-owned by its founder. No longer.

Hamdi Ulukaya has long belonged to the rarest breed of entrepreneurs: Those who’ve built multi-billion dollar companies without any outside investment. In the food industry, where Ulukaya’s Greek yogurt-maker Chobani has become a giant, it’s even more uncommon.

Now, that chapter in New Berlin, New York-based Chobani’s history is coming to an end. Chobani announced on Wednesday that it has accepted a $750 million loan, with warrants attached, from private equity firm TPG. The loan comes due in six years. The warrants could give TPG up to 35 percent of the company if Chobani reaches certain milestones–including an initial public offering of its stock, which is expected as early as next year.

Meanwhile, TPG will receive two seats on Chobani’s board. The deal also stipulates that Chobani will aim to bring in a new CEO within the year. Ulukaya will remain the company’s biggest shareholder and will become chairman of the board.

Chobani had reportedly run into a cash crunch after the opening of its $450 million plant in Twin Falls, Idaho, took longer to get up and running than anticipated.

The Greek-yogurt market in the U.S. has become more competitive in recent years, as companies such as Danone and Yoplait have tried to capitalize on the increased popularity of the market that Chobani seeded. Chobani still has a 38 percent share of the market, with about $1.5 billion in sales expected in 2014, according to the Wall Street Journal.

Chobani will use the $750 million for a raft of ambitious expansion projects. One of them is an organic version of its Greek yogurt, which some consumers have long called for. Chobani also wants to expand to offer other cooking ingredients. It already hosts a selection of recipes on its web site, some of which, like chicken and white bean chili, would initially seem to have nothing do with yogurt. The company also wants to sell yogurt with steel-cut oats and a line of desserts.

Ulukaya’s ex-wife unsuccessfully sued to stop the TPG deal, saying she is owed a share in the company and that Ulukaya stole his yogurt recipe from a rival.




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Chobani Grows Up: Big Money In, Founder Out as CEO
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