General Mills (GIS) Plans to Offload European Dough Businesses

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general mills GIS focuses on Accelerate’s strategy, which it supports with “how to win” and “where to play” options. As part of the strategy, the company has revealed plans to offload its European dough business to ready-to-bak dough solutions company – Cerelia. The deal includes General Mills’ own branded and proprietary dough businesses in Germany, the United Kingdom and Ireland, including the Knack & Back and Jus-Rol brands. Management expects to complete the transactions by the end of the 2022 fiscal year.
These abstractions will put Zacks’ #3 (Hold) rating a step closer to achieving Accelerate’s strategy priorities. Titled How to Win, General Mills focuses on four pillars designed to provide a competitive advantage. These include building the brand, doing innovations, unleashing scale and keeping the business strong. The ‘Playground’ principle was set to enhance the company’s ability to achieve profitability through geographic and product prioritization as well as portfolio restructuring. This principle prioritizes investing in five global platforms, driving growth in local gem brands and reshaping the portfolio.

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On the portfolio reconfiguration, General Mills entered into a Memorandum of Understanding to offload a 51% controlling stake in Yoplait SAS in March. The deal is likely to close by the end of 2021. General Mills completed the acquisition of Tyson Foods’ pet processing business in July. The acquired business is a leader in natural meat treatment for pets. General Mills noted that the acquisition bodes well amid growing pet food category trends emerging from the humanization of pets, particularly in the pandemic. GIS gained 9.7% in the past three months versus the industry’s 2.3% decline.

Other food players earn from purchases

Many companies in the food business are benefiting from strategic acquisitions such as Post Holdings, Inc. Mail, McCormick & Company, Incorporated MKC and Hershey Company HSY. In the fourth quarter of fiscal year 2021, Post Holdings net sales included $99.8 million of net sales from acquisitions made through fiscal year 2021. Acquisitions include the Egg Beaters’ ready-to-eat cereal business, the Egg Beaters liquid egg brand, and Almark Corporation Foods brand, related assets, and Peter Pan’s nut butter brand.
McCormick has increased its presence strategically through acquisitions to strengthen the portfolio. In December 2020, MKC announced that it had purchased a 100% stake in FONA International, LLC and some of its subsidiaries to expand the flavor solutions segment. In November 2020, MKC acquired the parent company of Cholula Hot Sauce – a premium hot sauce brand based in Mexico – to accelerate growth in the condiment platform.
Hershey has entered into a definitive agreement to acquire Dot’s Pretzels LLC. The addition of Dot’s Pretzels coincides with the company’s initiative to boost its savory snack portfolio. The company also announced its plans to acquire Pretzels Inc. From a subsidiary of Peak Rock Capital. The acquisition will expand Hershey’s snack production and production capabilities. Management expects to complete the transactions by the end of 2021.
HSY and MKC are up 3.1% and 0.3%, respectively, in the past three months. POST has decreased by 7.4% during this time.
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