General Mill Inc. is weighing its option to sell its Helper and Progresso soup brands among other portfolios as per knowledgeable sources. Goldman Sach Group Inc is reportedly working with a food giant in the potential divestiture.
As per Bloomberg news, the company is targeting $ 3 billion from the sale, including its smaller brands. The asset sale of the Minneapolis-based food giant is expected to attract the attention of private equity firms as per sources who did not wish to be identified since the information is confidential.
The emergence of health-conscious younger people is influencing big food companies to reposition their portfolios. This includes J.M. Smucker Co., who announced in July to sell Pillsbury apart from its U.S. Baking business to Brynwood Partners. Other companies are sifting through their non-core business.
In March, General Mill announced its decision to sell French dairy cooperative Sodiaal its 51% stake in the Yoplait SAS yogurt business. Representatives of Goldman Sachs and General Mills declined to comment. Other people said that no final decision had been made yet regarding the transaction.
Share prices fell to $ 62.90, down by 1% on Thursday. The market capitalization of General Mills is $38 billion. After gaining around 10% in 2020, shares had risen 8% this year till Wednesday due to lockdown effects as people stocked the packaged foods in their pantry. The company expected changes in consumer behavior towards the demand for food at home in the pandemic during its quarterly results announcement in September.
According to Conor Cuddy, an analyst with Bloomberg Intelligence, the selling of Helper and Progresso Brands could help the company raise funds for future acquisitions without taking new debts.
Health and Pets
The potential divestment is an indication of General Mills repositioning its portfolio. It could be a catalyst for investing in health-minded or pet category products, according to Cuddy.
Progresso’s roots are traced back to its tomatoes importing business by an Italian immigrant in the early 1900’s as per the website of General Mills. In 2001 General Mills acquired this brand from its takeover of Pillsbury for $10.4 billion. Progresso makes soup mixes, broths, breadcrumbs, and canned soups. In the early 1970s, Hamburger helper was launched for consumers looking to add beef to their meals.