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Bloomberg report: General Mills looks to sell Progresso, Hamburger Helper for $3B

General Mills is considering selling two of its well-known brands — soup brand Progresso and the ready-to-eat meal brand Helper — for $3 billion, according to a report by Bloomberg News.

In addition to these two household name brands, the sale would include additional smaller brands. To consider the feasibility of offloading these brands, General Mills is working with the Goldman Sachs Group. Sources familiar with the deal stated that this portion of General Mills’ portfolio will likely attract private equity firms.

Bloomberg also reported that General Mills will potentially consider selling other parts of its business.

The timing of this sale is noteworthy. At-home consumption levels remain high for consumers despite the growing patronage of foodservice. By seeking to sell this division, General Mills would pad its pockets with billions in cash reserves that it can use to acquire companies that can accelerate its growth. Such a large sale would also help the company lower its debt levels incurred from prior M&A deals.

It is also telling that the private equity industry is where sources indicated the sale will likely take place. For years, mega-mergers were the bread and butter of the food and beverage industry with bolt-on deals acting as growth catalysts. However, as consumers have progressively drifted toward better-for-you, trendy, and innovative tastes, the larger corporate brands have had difficulty keeping pace with consumers. Private equity firms have picked up the slack and are now routinely investing in food and beverage brands to breathe new life into them.

As a result of these changing consumer trends, General Mills told investors in 2018 that it would work to sell underperforming brands or SKUs that fell outside the company’s focus areas. In 2021, the company said will drive growth by focusing on purpose-driven brands, relentless innovation and scaling. Reshaping its portfolio through acquisitions and divestitures was on the list of the four strategies that it will emphasize as well as investing in “local gem brands,” which represented 35% of sales in 2020.

This focus on clean label, better-for-you offerings is nothing novel in the industry. Companies from Kraft Heinz to Coca-Cola are looking to boost their bottom lines by overhauling their portfolios to align with current consumption patterns. General Mills has also taken steps in this direction. Earlier this year, the company said it would sell its majority stake in the European operations of Yoplait in order to gain control of Yoplait’s Canadian operations and increase its control of the brand in North America.

Now the company is delving deeper into an even larger restructuring move that sheds some of its oldest brands. Progresso has been a part of the General Mills’ portfolio since 2001 when the food and beverage conglomerate purchased Pillsbury. Helper is part of the company’s Betty Crocker umbrella and has been around since the 1970s.