General Mills to Sell Green Giant, Le Sueur for $765 Million -- 2nd Update
September 03 2015 - 9:40AM
Dow Jones News
By Chelsey Dulaney
General Mills Inc. has agreed to sell its Green Giant and Le
Sueur frozen and canned vegetable brands to B&G Foods Inc. for
$765 million in cash.
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.
Shares of B&G added 1.8% to $31 a share in premkaret
trading, while General Mills shares were inactive.
General Mills said it plans to use proceeds from the sale to
fund share buybacks and to reduce its debt.
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. The Minneapolis-based company
has been cutting jobs and closing plants as it struggles with
Americans' growing aversion to packaged foods.
General Mills said it is working to focus its resources on the
brands and markets that have the greatest growth potential.
During the quarter that ended in May, General Mills took a $260
million charge to write down the value of the Green Giant brand by
13%. At the the time, General Mills pegged the carrying value of
the brand at $425.9 million. The company said it redirected
resources away from supporting Green Giant, which caused it to
review the business and determine it wasn't worth what it once
was.
General Mills said it would continue to operate Green Giant in
Europe and other export markets under license from B&G. The
company expects the deal to dilute earnings for the year ending
next May by 5 cents to 7 cents a share.
For B&G's part, the deal will add significantly to its sales
and earnings and give it a foothold in the frozen-food market.
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. For its 2014 fiscal year, B&G reported net sales of
$848 million, up 17% from the prior year, while per-share earnings
fell to 76 cents from 98 cents on big impairment charge.
The deal is expected to close in the fourth quarter.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 03, 2015 09:25 ET (13:25 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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