Business

Chobani’s move to Delaware from NY signals IPO

New York’s dairy king has moved to Delaware.

Chobani, the top-selling Greek yogurt brand founded by Turkish immigrant Hamdi Ulukaya, quietly relocated its corporation from New York to Delaware last month, state records show.

The move — which comes just as Albany seeks to make yogurt the state’s official snack — is more evidence that the company headquartered in Norwich, NY, is preparing to go public.

More than 50 percent of publicly traded companies, including 64 percent of Fortune 500 companies, are incorporated in Delaware, which is known for its corporate-friendly laws.

Plus, Chobani scored a $750 million loan from private equity firm TPG last month.

The Delaware move combined with the loan offer “the clearest proof that rumors of an eventual Chobani IPO are no longer rumors,” said Sam Hamadeh, founder and CEO of research firm PrivCo.

“The biggest yogurt IPO is now imminent.”

Last month, Chobani denied reports that it was gearing up for an IPO anytime soon as it explored options for raising capital.

Ulukaya is taking a big risk in getting to his IPO goal by putting Chobani’s trademarks up as collateral against the megamillions, PrivCo’s research shows. TPG will own the company’s most important asset, its brand, if Chobani bungles its expansion plan and defaults on the massive debt.

TPG wins a smaller equity stake, in the range of 20 percent, if Chobani grows its revenues rapidly enough to IPO next year, sources said. The PE firm wins a bigger stake, north of 30 percent, if growth is slower than expected, Hamadeh said.

“It’s a gamble, certainly,” said Hamadeh, noting that Chobani is currently profitable but cash flow negative due to its costly expansion plans. “But Chobani’s CEO has already demonstrated that he’s not shy about making very big, risky bets.”

One person who’s unhappy about the recent changes is Ulukaya’s ex-wife, Ayse Giray, who is suing for a stake in the company.

Giray has filed papers in New York state court seeking more information about the loan and the move to Delaware amid fears that a default will leave her empty-handed.

“We believe that this presents a situation where Dr. Giray’s alleged shareholder interest can be wiped out before trial,” her lawyers wrote in a recent memo about the potential for Chobani to default.

Giray’s fear that TPG’s loan will “bankrupt the company is as ridiculous as is it baseless,” said a Chobani spokesman. “Chobani became a Delaware limited liability company to permit greater flexibility in operating and growing its business.”

Giray is fighting for a 53 percent stake based on a $500,000 investment in Euphrates, Chobani’s predecessor company.

TPG declined to comment, as did Giray’s lawyer, Richard Feldman.

Experts said Delware LLCs are famous for providing owners greater protections against creditors.

“A lot of companies want to be in Delaware because it’s very favorable to corporations and to management,” said Micah Bloomfield, a tax lawyer in New York. “If you have shareholders you want to squeeze out, it’s easier to do that.”