General Mills To Sell Green Giant To B&G Foods For About $765 Mln - Quick Facts

(RTTNews) - General Mills Inc. (GIS) said Thursday that it agreed to sell its Green Giant and Le Sueur vegetable businesses to B&G Foods Inc. (BGS) for about $765 million in cash, subject to an inventory adjustment at closing.

General Mills will continue to operate the Green Giant business in Europe and select other export markets under license from B&G Foods.

The Green Giant and Le Sueur businesses included in the proposed transaction, comprised of the U.S., Canada, and select other markets, generated annual net sales of approximately $585 million in fiscal 2015.

The transaction, which is subject to regulatory approval, is expected to close by the end of the calendar year.

General Mills noted that it expects to use the net proceeds for share repurchases and debt reduction. The company anticipates the transaction will be dilutive to fiscal 2016 earnings per share in the range of approximately 5 to 7 cents, excluding transaction costs and a one-time gain on the sale.

General Mills stated that it will provide additional details about the impact of the transaction when it reports its fiscal 2016 first-quarter results on September 22, 2015.

Separately, B&G Foods said it projects that following a six to twelve month transition period, the Green Giant and Le Sueur brands will generate on an annualized basis net sales of approximately $550 million, adjusted EBITDA of approximately $95 million to $100 million and earnings per share of $0.60. Because the acquisition will be structured as an asset purchase, B&G Foods expects to realize approximately $137 million in tax benefits on a net present value basis.

"Consistent with our acquisition strategy, we expect the acquisition to be immediately accretive to our earnings per share and free cash flow. In addition, the acquisition marks our entry into the frozen food category, which we believe will open many future growth opportunities," said Robert Cantwell, President and Chief Executive Officer of B&G Foods.

B&G Foods noted that it intends to fund the acquisition and related fees and expenses with additional revolving loans and new incremental terms loans under its existing credit facility. B&G Foods has received financing commitments from Barclays Bank PLC, BofA Merrill Lynch and RBC Capital Markets.