M&A

General Mills Sells Green Giant for $765M

The company anticipates the transaction will be dilutive to fiscal 2016 earnings per share by 5 to 7 cents.
Katie Kuehner-HebertSeptember 3, 2015

General Mills is shedding its Green Giant and Le Sueur vegetable businesses as it works to revamp its food lines to keep up with changing consumer tastes.

The Minneapolis company said on Thursday that it was selling the brands to B&G Foods for roughly $765 million in cash, subject to an inventory adjustment at closing.

“The sale reinforces General Mills’ strategic priority to shape its portfolio for growth, focusing its resources on the brands, categories, and geographic markets that have the greatest future growth opportunities,” the company said in a press release.

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The deal encompasses the Green Giant and Le Sueur businesses in the United States, Canada, and select other markets, which together generated annual net sales of about $585 million in fiscal 2015. General Mills would continue to operate the Green Giant business in Europe and other select export markets under license from B&G Foods.

The sale comes as General Mills, the maker of brands including Cheerios cereal and Hamburger Helper, struggles with changing consumer tastes and a strong dollar, according to the Wall Street Journal/Dow Jones. The company has been cutting jobs and closing plants as it struggles with Americans’ growing aversion to packaged foods.

The deal would boost B&G’s sales and earnings significantly and give it a foothold in the frozen-food market, the WSJ said. After a transition period, the brands are expected to add $550 million to B&G’s net sales and 60 cents a share to its earnings. B&G, which owns food brands like Molly McButter cheese flavoring and Pirate’s Booty rice-and-corn puffs, also expects $137 million in tax benefits from the deal.

After the deal closes, expected by the end of the year, General Mills expects to use the net proceeds for share repurchases and debt reduction. The company anticipates the transaction would be dilutive to fiscal 2016 earnings per share in the range of approximately 5 to 7 cents, excluding transaction costs and a one-time gain on the sale.

Data Curated by findthecompany.com