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General Mills (GIS) Plans to Offload European Dough Businesses

·3-min read

General Mills GIS is focused on the Accelerate strategy, which supports it with the “how to win” and “where to play” choices. As part of the strategy, the company unveiled plans to offload its European dough businesses to a leading ready-to-bake dough solutions company — Cerelia. The transaction includes General Mills’ branded and private-label dough businesses in Germany, the U.K. and Ireland, including the Knack & Back and Jus-Rol brands. Management anticipates concluding the transactions by the end of fiscal 2022.

These divestitures will put the Zacks Rank #3 (Hold) a step closer to achieving the Accelerate strategy priorities. Under “how to win”, General Mills is focused on four pillars designed to provide a competitive advantage. These include brand building, undertaking innovations, unleashing scale and maintaining business strength. The "where to play” principle is outlined to enhance the company’s capabilities to generate profitability through geographic and product prioritization along with portfolio restructuring. This principle prioritizes investing in five Global Platforms, driving growth in Local Gem brands and reshaping portfolio.

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Zacks Investment Research

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About reshaping portfolio, General Mills entered into a memorandum of understanding to offload 51% controlling interest in Yoplait S.A.S in March. The transaction is likely to conclude by the end of 2021. General Mills concluded the acquisition of Tyson Foods’ pet treats business in July. The acquired business is a pioneer in natural meat treats for pets. General Mills noted that the acquisition bodes well amid growing pet-food category trends stemming from the humanization of pets, especially in the pandemic. GIS has gained 9.7% in the past three months against the industry’s decline of 2.3%.

Other Food Players Gaining on Buyouts

Several companies in the food space are benefiting from strategic acquisitions like Post Holdings, Inc. POST, McCormick & Company, Incorporated MKC and The Hershey Company HSY. In fourth-quarter fiscal 2021, Post Holdings’ top line included $99.8 million in net sales from acquisitions made through fiscal 2021. The buyouts include Private label ready-to-eat cereal business, Egg Beaters liquid egg brand, Almark Foods business and related assets and Peter Pan nut butter brand.

McCormick strategically increased its presence through acquisitions to strengthen portfolio. In December 2020, MKC announced that it had bought a 100% stake in FONA International, LLC and some of its affiliates to expand the flavor solutions segment. In November 2020, MKC acquired the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand — to accelerate growth in the condiment platform.

Hershey entered into a definitive agreement to acquire Dot’s Pretzels LLC. The addition of Dot’s Pretzels is in sync with the company’s initiative to boost the salty snacking portfolio. The company also announced its plans of acquiring Pretzels Inc. from an affiliate of Peak Rock Capital. The acquisition will further expand Hershey’s snacking and production capabilities. Management envisions concluding the transactions by the end of 2021.

HSY and MKC have increased 3.1% and 0.3%, respectively, in the past three months. POST has moved down 7.4% during this time.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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