* B&G to also buy General Mills ' Le Sueur canned vegetables
unit
* Deal valued at about $765 mln
* B&G shares rise as much as 14 pct
(Adds details, analyst and B&G CEO comments, shares)
By Ramkumar Iyer
Sept 3 (Reuters) - Snack food company B&G Foods Inc BGS.N
said it would buy General Mills (NYSE:GIS) Inc's GIS.N Green Giant frozen
foods and Le Sueur canned vegetables brands for about $765
million to expand its distribution network and enter the frozen
foods market.
Shares of B&G, which expects the deal to add to earnings
immediately, rose as much as 14 percent to a 14-month high on
Thursday.
Growth in the frozen vegetables category has been sluggish
in recent years as consumers shift to fresher items. This has
led to companies scaling back marketing spend on frozen foods.
B&G plans to double the amount General Mills has been
spending on marketing the Green Giant brand, B&G Chief Executive
Robert Cantwell said on a conference call.
"In General Mills, Green Giant was an important brand, but
they had a different direction...It makes more sense under B&G's
ownership and we're going to pay a lot more attention to it,"
Cantwell said.
Green Giant, with a portfolio of more than 160 products, is
the second-biggest frozen foods brand by market share in the
United States and the largest in Canada.
B&G, which sells Vermont Maid syrups, Pirate's Booty popcorn
and Cream of Wheat breakfast porridge mixes, said it expected
the acquired businesses to generate annual sales of about $550
million and add 60 cents per share to its profit.
ID:nBw31NMJha
The two brands had net sales of about $585 million in fiscal
2015, General Mills said. ID:nPnbdTj34
General Mills, like other big packaged food companies, has
been looking to shed less-profitable brands to cut costs and
focus on faster-growing brands.
Reuters reported last week that General Mills was in
late-stage talks with B&G to sell Green Giant, whose mascot is
the Jolly Green Giant. ID:nL1N1121OQ
The sale raises the question of whether General Mills might
be considering more extensive portfolio changes to reduce
exposure to older legacy brands, Sanford Bernstein Alexia Howard
wrote in a note.
General Mills said it would continue to operate the Green
Giant business in Europe and select other markets under license
from B&G.
B&G shares were up 12.6 percent at $34.29 in afternoon
trading on the New York Stock Exchange, while General Mills'
shares were up 1.3 percent at $57.55.
Barclays (LONDON:BARC) and RBC Capital Markets are B&G's financial
advisers for the deal, while Rothschild advised General Mills.