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September 3, 2015

B&G Foods to buy Green Giant from General Mills

US group B&G Foods is entering the frozen food category through the acquisition of the Green Giant and Le Sueur brands from General Mills for around US$765m in cash.

  • B&G Foods expects boost to EPS
  • CEO predicts "many growth opportunities" from move into frozen
  • General Mills to run Green Giant brand under licence in Europe

US group B&G Foods is entering the frozen food category through the acquisition of the Green Giant and Le Sueur brands from General Mills for around US$765m in cash.

The deal is expected to be "significantly accretive" to earnings per share and free cash flow, B&G said today (3 September). The company projects, following a six- to twelve-month transition period, the Green Giant and Le Sueur brands will generate on an annualised basis net sales of approximately $550m, adjusted EBITDA of approximately $95-10m and earnings per share of $0.60.

Because the acquisition will be structured as an asset purchase, B&G Foods expects to realise approximately $137m in tax benefits on a net present value basis, the group added.

“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," Robert Cantwell, president and CEO of B&G, said. 

Cantwell added the group believes its entry into the frozen food category will "open many future growth opportunities."

It is anticipated the agreement will close during the fourth quarter and is subject to closing conditions and regulatory approvals.

Under the agreement, General Mills will continue to operate the Green Giant brand in Europe and other markets under licence from B&G. General Mills said the sale reflected its greater focus on brands, categories and markets where it sees the greatest opportunities to grow. The company said it expects to use the proceeds for share repurchases and debt reduction. Excluding transaction costs and the one-time gain on the sale, General Mills said the deal will reduce fiscal 2016 EPS by 5-7 cents. 

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