Branded consumer foods provider General Mills, Inc. (GIS) has agreed to sell its Helper main meals and Suddenly Salad units to Eagle Family Foods Group in a cash deal of about $610 million. The transaction is expected to close in Q1 2023. Eagle Family is a part of Kelso & Company.
Management Weighs In
General Mills Group President, North America Retail, Jon Nudi, commented, “With this divestiture, we are continuing to reshape our portfolio and advance our Accelerate strategy. This transaction improves our North America Retail segment’s growth profile and allows us to increase our focus on brands and categories where we have the best opportunities to drive profitable growth.”
Net sales for the divested businesses were $235 million in 2021. General Mills anticipates the transaction to be dilutive to its adjusted bottom line in the range of $0.10 to $0.11 in the first year post-closing.
Analyst’s Forecast
Evercore ISI analyst David Palmer has reiterated a Hold rating on the stock alongside a price target of $65. Overall, the Street has a Hold consensus rating on the stock based on two Buys and eight Holds. The average General Mills price target of $68.40 implies the stock is fairly priced at current levels. That’s after a 10% gain in share prices over the last six months.
Hedge Funds Remain Positive
In conjunction with this gain in share price versus the slump in the broader market, hedge funds remain very positive about General Mills. TipRanks data indicates hedge funds have increased holdings in the stock by 645,900 shares in the last quarter. Importantly, Ray Dalio’s Bridgewater Associates holds General Mills shares worth about $82.1 million.
Closing Note
This strategic move helps General Mills keep its sights on the parts of its portfolio where the company can drive profits. Moreover, while the stock has outperformed the broader market over the past six months, positive hedge fund sentiment should keep investor sentiment buoyant as well.
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