Unstructured Finance

Deals wrap: Yoplait to split a yogurt with General Mills

General Mills cereals are displayed on a kitchen counter in Golden, Colorado December 17, 2009. REUTERS/Rick Wilking

After months of tense negotiations that involved members of the French government, management disputes and influence from an agricultural lobby General Mills is set to pay $1.12 billion for private equity fund PAI Partners half of the Yoplait yogurt brand.

The General Mills bid was attractive for several reasons. It has a long standing relationship with Yoplait, holding the license for the companies yogurt in the United States since 1977. General Mills was also able to pay for the transaction off its balance sheet. Sodiaal, which controls the other half of Yoplait, was also attracted to the idea that General Mills could use its international reach to boost sales in emerging markets, particularly India and China.

For its part General Mills protects its U.S. distribution rights and eliminates the risk of a competitor edging in on that business. The Deal Journal has some early market reaction.

News that Groupon could be valued as high as $25 billion is being met with skepticism.

A source familiar with the matter told Reuters the site was unlikely to command such a lofty valuation so shortly after it turned down a $6 billion buyout offer from Google in December.

Campbell Soup CEO blasts rival Progresso

*Corrects blog post from Tuesday to show General Mills’ “World Recipes” soups are ”ready-to-serve” not “ready-to-drink”.  

conant1It is not every day that CEOs truly speak their minds about their rivals in public, so we thought we would share.

During Campbell Soup Co’s annual meeting yesterday with analysts and investors, CEO Douglas Conant fielded a question from an analyst about the company’s marketing messaging. The analyst said rival Progresso Soup owner General Mills Inc had recently said it felt that the entire soup category was over-emphasizing the message of convenience and health in its marketing and under-emphasizing taste.

Check Out Line: Beware the ides of rising costs for food companies

gis1Check out fears of rising costs for U.S. food companies.

Rising commodity costs and promotional discounts are pressuring profit margins for food companies and analysts said more may be on the horizon.

General Mills, whose brands include Cheerios, Green Giant and Haagen-Dasz, said on Tuesday that the gross margin in its most recent quarter was flat, excluding higher ad costs and other items.

On Thursday, General Mills said it expects pricing and promotions to look the same over the next six months as they have the prior half year. It also sees some players in the sector moderating their promotional activity as commodity costs rise and sees raising list prices in some categories after that. 

Check Out Line: General Mills’ new Cheerios a hit, but private label bites

CheeriosCheck out the power of new products to get shoppers going.

General Mills reported some pretty good results for its third quarter as shoppers gobbled up its new chocolate Cheerios cereal and the company got a boost from lower commodity costs.

But the sailing wasn’t entirely smooth. Sure, General Mills boosted advertising and media spending by 33 percent.  Despite that effort to raise consumer awareness and its choco Cheerios hit, overall sales volume was flat.

Apparently, the economy and unemployment are still painful to most consumers, many of whom seem to still prefer cheaper private label items to branded foods.

Sugar shortage spawns sweet jokes from late-night comedian

By Christopher Doering 
The surge in sugar prices and potential risk of a shortage has provided some sweet fodder for one late-night comedian who can’t help but poke fun at the attention the tasty ingredient is receiving.
colbertStephen Colbert, who hosts the Colbert Report on Comedy Central, spent part of his show this week lamenting the sugar crisis. 
After showing a montage of television clips about the sugar situation, Colbert proceeded to break a glass cover — similar to one containing a fire extinguisher — and pulled out a bag of sugar, which he dosed all over himself.
“Oh my God, there’s a sugar shortage,” said Colbert. “How could this happen. Well, like interstate highways and potable water it’s the government’s fault.”
Large U.S. food companies, including Kraft Foods, General Mills Inc and Hershey Co, have been pushing the Obama administration to ease sugar import curbs, citing forecasts for unprecedented sugar shortages that could result in higher retail prices and possible job losses.
In a letter to U.S. Agriculture Secretary Tom Vilsack dated Aug. 5, the companies and other groups warned that “our nation will virtually run out of sugar,” if a USDA forecast is accurate.
“Can you imagine an America with no sugar?” said Colbert. “Juice would contain nothing but 10 percent juice and we’d all be eating uncaramelized apples. What are we going to do?”  The Colbert Report Mon – Thurs 11:30pm / 10:30c Sugar Shortage – Marion Nestle www.colbertnation.com Colbert Report Full Episodes Political Humor Health Care Protests

For more information on the sugar shortage, click here.

Check Out Line: More dark clouds in retailing

sale1Check out more bad news in the retail sector.

U.S. retail sales slumped for the second straight month, coming in weaker than analysts had expected due to sluggish gasoline and electronic goods purchases. Meanwhile, U.S. foreclosure activity in April jumped to a record high, further pressuring home prices and making a recovery tougher.

Fashion company Liz Claiborne posted a deeper-than-expected quarterly loss as retail sales remained weak in the recession. The owner of Juicy Couture, Kate Spade, Lucky Brand and Mexx labels is cutting jobs, scaling back expansion and offering more lower priced items to combat the slowdown.

Meanwhile, General Growth chose a company to provide its bankruptcy financing. The No. 2 U.S. mall owner filed for bankruptcy in April when it could not refinance its maturing loans due to tightness in the credit markets.

Check Out Line: Tale of two trends for General Mills

Check Out quarterly results at General Mills.hamburger

The maker of Progresso soups, Hamburger Helper and Green Giant frozen vegetables posted a disappointing profit for its fiscal third quarter. Even its slightly higher full-year outlook is below Wall Street’s expectations.

But here’s an interesting twist — the company saw strong sales of cereals, soups, frozen vegetables and refrigerated dough during the quarter, in a continuing trend whereby consumers are eating more meals at home to save some money in the recession. But while that helped sales in the U.S. retail segment, the bakery and food service segment languished, as consumer thrift led to fewer trips to restaurants and cafeterias.

Still, the company is working to capitalize on consumers’ new habits. Later this year, General Mills will unveil new items across categories as it tries to entice shoppers to buy its brands, CEO Ken Powell said in an interview.

Check Out Line: Food makers surprise Wall St on the upside

cag2Check out those higher prices at the grocery store helping General Mills and ConAgra to post quarterly results above Wall Street expectations.

Both food makers reported lower profits on a net basis.

But excluding various items, their earnings were stronger than analysts were expecting.

General Mills, the maker of Progresso soup and Cheerios cereal, has benefited along with other food companies as consumers buy more soup, cake mixes and yogurt to save money by eating at home more often. 

Check Out Line: Bad jobs data follows bad sales data

Check out more bad news for retailers headed into the holiday season.

On Friday, fresh data showed the U.S. economy shed 240,000 jobs in October, worse than the 200,000 decline that was forecast. The Labor Department said the national unemployment rate shot up to 6.5 percent from 6.1 percent in September — the highest since March 1994.

That disappointing report came a day after U.S. retail chains reported their worst October sales results in 35 years.

“October was a disaster of epic proportions for most of the retailing community, as continued economic negatives resulted in a ‘shopping strike’ by consumers and led to material misses by a number of key players and a decidedly more cautious outlook from virtually every player in the apparel sector,” wrote Eric Beder, a retail analyst for Brean Murray, Carret & Co.

Check Out Line: General Mills Cheers Investors

cheerios1.jpgCheck out rising profit at General Mills

The maker of Cheerios cereal, Green Giant vegetables and Yoplait yogurt said cost cuts and worldwide demand aided results in its third quarter. Sales rose 16 percent in both its snacks and baking products divisions and 14 percent for Yoplait.

Still, not all is rosy in this challenging economic environment. General Mills expects higher input costs in the current quarter and said it plans to invest in consumer marketing to help drive sales.

Also in the basket:

Bargain hunters help Ross Stores

Dillard’s faces more shareholder pressure

(Photo: General Mills image library)