General Mills considering sale of Progresso, Hamburger Helper for $3B, Bloomberg reports

Dive Brief:

• General Mills is reportedly considering a sale of brands including Progresso Soup, Hamburger Helper and other smaller products, Bloomberg reported.
• The Minnesota-based CPG is looking to raise about $3 billion from the sale, the wire service said, citing people with knowledge of the matter. 
• While food and beverage companies have avoided large-scale mergers in recent years, companies such as General Mills, Nestlé and Kraft Heinz have been aggressively pruning their portfolios to jettison slower-growing brands or ones that don’t fit with their other offerings, while also buying products that accelerate revenue expansion or fit into on-demand categories.

Dive Insight:

For years, the elixir of growth for food and beverage companies was making a big, transformative deal. General Mills, best known for Cheerios, Betty Crocker and Nature Valley, entered the natural pet food space with an $8 billion purchase of Blue Buffalo Pet Products nearly four years ago.

But similar to other CPGs, General Mills’ strategy now has focused on overhauling its portfolio to cater to trends, including clean label, snacking and better-for-you offerings.

This has naturally led to dozens of companies shedding or acquiring assets big and small — from Kraft Heinz’s $3.35 billion sale of Planters to Hormel Foods or Conagra Brands selling Peter Pan peanut butter to Post Holdings for an undisclosed amount. Coca-Cola announced earlier this month it is spending $5.6 billion to purchase the remaining 85% stake it doesn’t currently own in sports drink maker BodyArmor, the largest deal for the 129-year-old company.

For its part, General Mills struck a deal in March where it would buy full control of Yoplait’s Canadian operations, giving it more control over the brand in North America.

Few companies have been as active as Nestlé, which has engaged in more than $30 billion in transactions since 2018 that has included selling its U.S. confections and ice cream businesses and the majority of its struggling North American bottled waters business — all of which were multibillion-dollar deals.

“The big moves are never done because the market never stays still and we need to keep up to date with it,” Sanjay Bahadur, deputy executive vice president and head of group strategy and business development at Nestlé, told Food Dive earlier this year.

For General Mills, the sale of brands like Progresso and Hamburger Helper would help it reduce its debt levels inflated from prior acquisitions, along with building up its cash reserve for acquisitions that can accelerate growth. A sale also would come at a time when at-home consumption remains elevated even as consumers are going out more. It’s possible General Mills is looking to strike while conditions remain hot.

While General Mills is still assessing whether to make a deal, private equity groups could be interested in the company’s assets, sources told Bloomberg. It’s also possible the CPG manufacturer could decide to sell the brands to other food companies.

B&G Foods has been a serial acquirer. In 2015, it dolled out $765 million to purchase Green Giant from General Mills. Since then, B&G added several innovative products — including veggie tots and riced veggies — that have turned the brand into one of the company’s most consistent money makers. An entity that buys brands from General Mills now could grow them through similar kinds of innovation.