UPDATE 2-Lactalis fires first shot in Yoplait battle

* Lactalis may pay 1.3 bln euros for Yoplait - source

* PAI Partners declines comment

* Sodiaal reiterates will not sell 50 pct Yoplait stake

(Adds detail, analyst comments)

By Dominique Vidalon

PARIS, Nov 17 (Reuters) - Lactalis, Europe's largest dairy group, on Wednesday fired the first shot in a possible battle for Yoplait, offering to buy the French yoghurt maker for an estimated 1.3 billion euros ($1.8 bilion).

Family-run Lactalis, owner of the Galbani, Lactel and President brands, did not put a price tag on its offer.

But a source close to the matter told Reuters the offer valued the world's second-largest dairy products maker at around 1.3 billion euros, or more than 10 times its operating profit.

The Lactalis offer would, however, be below the 1.5 billion euro price tag Yoplait chief executive Lucien Fa put on the maker of the Petits Filous yoghurt and Yop drinking yoghurt last week when interviewed by Reuters. [ID:nLDE6A71G3].

Unlisted Yoplait has been in the spotlight since the summer when private equity fund PAI Partners said it wanted to sell its 50 percent stake. [ID:nLDE689103]

Yoplait's other sharholder, France's largest milk cooperative Sodiaal, however reiterated on Wednesday it would not sell its 50 percent stake.

PAI Partners declined to comment on the Lactalis bid.

The sale process, which officially started a few days ago, could also draw interest from food giants such as Nestle (NESN.VX), General Mills (GIS.N), which distributes the Yoplait brand in the United states, Asian food groups and private equity groups. [ID:nLDE6A30Q7]

"Potential buyers with strong emerging market infrastructure and knowledge to launch the brand in new, dynamically growing geographies such as China, or expand further in existing markets, such as Mexico, would likely achieve good results with the brand," said Ildiko Szalai, Euromonitor packaged food analyst.

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For Key facts about Yoplait, click on [ID:nLDE6A70OU]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Large foreign companies might have greater firepower than Lactalis to expand Yoplait's geographic reach, notably in emerging countries. But for some analysts a French solution seems likely to prevail.

FRENCH SOLUTION

"There is a high likelihood that a national solution will be favoured as it would notably help secure milk collection in France," Oddo analyst Pierre Tegner said.

"The Lactalis offer, the sole French offer, would give birth to a big French dairy sector champion worldwide and would keep the Yoplait brand within the national patrimony," a Lactalis statement said.

Lactalis, Europe's leading milk collector, said it would stick to the terms of Sodiaal's milk contracts with farmers.

It processes more than 9.2 billion litres of milk worldwide, of which 5.2 billion is in France from 20,000 producers.

Right now, Sodiaal says it is not prepared to part with its Yoplait stake but analysts believe this could change.

"Sodiaal will not completely abandon control. I think Sodiaal will want to keep control over its brands," Tegner said.

Lactalis is offering to "associate Sodiaal to the development of Yoplait, notably for the management of its brand" the Lactalis statement said.

Foreign bidders in the French dairy sector could revive memories of a dispute over the industry five years ago.

Speculation that PepsiCo (PEP.N) would make a bid for France's Danone drove up Danone's shares in mid-2005 and triggered talk of a foreign takeover.

The then-conservative government -- led by Dominique de Villepin - responded by declaring France's dairy industry strategic and introducing a policy of "economic patriotism."

Yoplait, set up in 1964, has grown to become the world's second-largest dairy products maker after French rival Danone (DANO.PA). It has built up global sales of 4.5 billion euros by operating internationally through a franchise network.

Unlisted Lactalis, Founded in 1933, has grown through acquisitions to reach revenue of 8.5 billion euros in 2009, with more than 40 percent from France.

It also has a joint venture with Swiss giant Nestle in chilled dairies in Europe, Lactalis Nestle Produits Frais.

A Lactalis/Yoplait alliance would create a dairy heavyweight with a global market share of around 10 percent, right behind Danone's 21 percent. Yoplait's currently has a 7 percent share.

Based in Laval, in western France, Lactalis employs 15,800 people in France out of a global workforce of 38,700.

(Reporting by Dominique Vidalon; Editing by Louise Heavens and Jane Merriman) ((dominique.vidalon.reuters.com; +33 1 49495432; Reuters Messaging:dominique.vidalon.reuters.com@reuters.net)) ($1=.7403 Euro) Keywords: YOPLAIT/