General Mills, Inc. (GIS) Working With Investment Banks To Sell Green Giant Frozen Vegetable Business
General Mills, Inc. (NYSE:GIS), which is struggling with weak sales of its products such as cereal, seems to be focusing itself on divesting its canned vegetable business, as well as the Green Giant frozen unit. The company has already initiated the process towards this end.
As a first step towards selling the units, General Mills, Inc. (NYSE:GIS) has started working with Rothschild, an investment bank, on the possible sale, Reuters reported, quoting people familiar with the events. The report indicated that the sale of these divisions could happen during the summer season. Both the company, as well as the investment banker, preferred not to comment on the latest development.
The company’s Green Giant segment produces over 160 different products with Jolly Green Giant as the mascot. Its product range includes hummus, chips, corn on the cob, and canned, and steamed vegetables. The two units generate revenue of approximately $700 million for the company.
General Mills, Inc. (NYSE:GIS) has already begun taking steps to improve its bottom line by slashing 700 – 800 jobs, improving the efficiency of supply chains and saving advertising costs to realize over $400 million savings in the current fiscal year of 2015. In January, the company indicated that it was shutting down its plants in New Albany, Indiana, and Midland, Ontario, as part of the move.
The health consciousness and goodness are driving consumers to shift towards items that are healthier, resulting in the company suffering from sluggish sales of a number of its products. The consumers’ behavior has impacted, unfavorably, cereal brands such as Chex and Cheerios, as well as its frozen foods unit.
In the last five years, the sale of frozen meals has witnessed an approximately 3% decrease in the United States, data from Euromonitor International suggests. As a result, big consumer companies have begun to divest underperforming brands with a view to adding healthier offerings in their product profiles through acquisitions. Incidentally, General Mills, Inc. (NYSE:GIS) has purchased Annies Inc (NYSE:BNNY) for $820 million in September last year.
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