General Mills announced plans to sell its Green Giant and Le Sueur brands of canned and frozen vegetables to B&G Foods for an estimated $765 million in cash. The deal is expected to close in the fourth quarter of 2015 and is subject to customary regulatory approval.
“We are thrilled to welcome Green Giant and Le Sueur to the B&G Foods family of brands. For over 100 years, Green Giant and Le Sueur have been providing consumers with great tasting, nutritious vegetables picked at the peak of perfection. We look forward to building on that rich history by offering new and innovative products that will respond to the needs of today’s health conscious consumer,” said Robert C. Cantwell, president and CEO of B&G Foods.
This purchase allows B&G entrance into the frozen food category.
B&G Foods projects that following a six to twelve month transition period, the Green Giant and Le Sueur brands will generate on an annualized basis net sales of approximately $550 million, adjusted earnings between $95 million to $100 million. This would be an incremental 60 cents in earnings per share.
For General Mills this deal is inline with the company’s move away from many packaged foods. It took a $260 million charge in the fourth quarter to write down the value of its Green Giant frozen and canned vegetables business.
The company said at the time that the frozen foods sales have been declining and that people also seemed to be shifting to traditional “blocks” of frozen vegetables, which cost less than the vegetable blends and packages with sauces that Green Giant makes.
General Mills is shifting its focus to cereal and yogurt, as well as sales for its small but growing organic and natural foods segment.
B&G Foods and General Mills are suppliers to Wal-Mart Stores and operate sales offices in Northwest Arkansas.