General Mills plans US$1-2B acquisition as it exits yogurt market

USA – General Mills is eyeing a potential acquisition valued at between US$1-2 billion as the company prepares to exit the yogurt category. 

Chairman and CEO Jeff Harmening revealed that the US-based company is exploring strategic options to bolster its growth profile, with plans to reinvest funds from the sale of its North American yogurt business. 

The sale to Lactalis and Sodiaal, announced last week, is expected to bring in US$2.1 billion.

During the company’s Q&A session following the release of first-quarter results, Harmening expressed optimism about the company’s financial position and readiness for mergers and acquisitions (M&A). 

He pointed to recent deals, such as the acquisitions of Annie’s and Tyson Foods’ pet-treats business, which came in under US$1.2 billion each, as benchmarks for the size of future deals. 

However, the planned bolt-on acquisition will be larger than those, though still smaller than General Mills’ US$8 billion acquisition of Blue Buffalo in 2018.

General Mills did not pursue any significant acquisitions in fiscal 2024, preferring instead to return cash to shareholders. 

However, Harmening indicated that the company is now actively seeking opportunities, especially in sectors that align with its existing portfolio, such as pet food, snacking, and foodservice. 

“We have a right to win in certain categories,” Harmening said, explaining that General Mills is targeting businesses where it already has a competitive advantage and sees growth potential, whether domestically or internationally.

While the company remains open to larger opportunities, Harmening suggested that smaller, bolt-on acquisitions are more likely, noting the potential for synergy in areas where General Mills already operates. 

“Where we have a competitive advantage, where we see growth, maybe get a little synergy along the way, those are the places where we will continue to look,” he explained.

In terms of financial performance, General Mills’ first-quarter results were broadly in line with expectations. 

Net sales for the period stood at $4.8 billion, a 1% decline in both reported and organic terms. The company faced a 1% drop in price/mix, while volumes remained flat. 

Operating profit fell by 11% to $832 million, while net profit decreased by 14% to $580 million. 

Harmening acknowledged the challenges, citing inflation, value-seeking behaviors from consumers, and the stabilization of global supply chains as key factors impacting the business.

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