General Mills sells Helper and Suddenly Salad for $610m as part of broader portfolio shakeup

25-May-2022 - Last updated on 25-May-2022 at 14:32 GMT

Source: General Mills

General Mills’ sale of its iconic Helper main meals and Suddenly Salad side dish business for $610m to Eagle Family Foods Group will free up resources and help rebuild its cash reserves as it continues to hunt for acquisitions to build out its five core platforms.

Expected to close in the first quarter of fiscal 2023, the cash deal is part of General Mills’ much larger “Accelerate strategy,” which includes reshaping its portfolio to focus on brands and categories where it believes it has the best opportunity to drive profitable growth, Jon Nudi, General Mills group president, North American Retail, said May 25 in a statement announcing the sale.

The company previously declared its intentions to build up its cereal, ice cream, snack bar, Mexican food and pet food business through an aggressive “always on” acquisition policy, which will require resources and a degree of liquidity to fund potential deals in a timely fashion.

As part of this approach, General Mills earlier this month agreed to buy frozen pizza crust maker TNT Crust with cash on hand and short-term borrowings in a deal that is set to close in the same quarter as the sale of Helper and Suddenly Salad to Eagle Family Foods Group.

The acquisition of TNT Crust adds to General Mills’ scale in the frozen baked goods platform, which Shawn O’Grady, group president of North American Foodservice recently said was on trend with consumers and poised for continued rapid growth.

Before buying TNT, General Mills expanded its toehold in the pet food category with the acquisition last July of Tyson foods’ pet treats business and before that in 2018 the acquisition of Blue Buffalo natural pet food for $8b.

On the human food side, General Mills expanded its position in the competitive snack bar set with the acquisition of premium meat snacks company EPIC Provisions in 2016, and the 2014 purchase of Annie’s for $820m.

To fund deals like these and others as part of Accelerate, General Mills CEO Jeff Harmening recently told investors that the company is “open to divestitures of growth dilutive businesses that have lower returns on investment and where General Mills is not uniquely positioned to win.”

The Helper and Suddenly Salad businesses appear to check these boxes. Together they represented $235m of the company’s overall $18m in sales in 2021.

Before factoring in any potential benefit from the sale’s proceeds, however, General Mills expects the divestiture of Helper and Suddenly Salad, which represented $235m in fiscal 2021, to dilute its earnings per share 10 to 11 cents in the first 12 months after closing.

Other recent divestitures include General Mills’ yogurt business in Europe and Brazil and dough in Europe and Argentina.

Through a combination of acquisitions and divestitures, General Mills is targeting long term growth of 2-3% organic net sales growth with additional portfolio changes helping to move the company to the higher end of that range.

Eagle Foods plans to ‘immediately’ expand Helper and Suddenly Salad

As for Eagle Foods, the acquisition of Helper and Suddenly Salad expands its position beyond the milks and snacks it is best known for and establishes three main business platforms – snacks, baking and meal & sides.

The company says in a same-day statement that it plans to “immediately start expanding the positioning of these two iconic brands and bring consumers tasty, convenient and affordable meal solutions.”

It has a positive track record when it comes to rebuilding iconic brands having reversed negative share and distribution trends for the popcorn brand Cretors and Popcor Indiana after it acquired them.

Eagle Foods CEO Bernard Kreilmann said in a statement that Helper and Suddenly Salad are “a perfect fit for what Eagle does best – investing in, innovating and revitalizing brands to drive growth and nurture them to reach their full potential.”