B&G FOODS is about to make a giant investment.
The American snack food company said yesterday that it would buy General Mills’s Green Giant frozen foods business, as well as its Le Sueur canned vegetable brand, for about $765m (£501m), in order to broaden its distribution network and expand into the frozen foods market.
Growth in frozen vegetables has been sluggish in recent years as consumers have shifted to buying fresher items. As a result, many companies have scaled back their marketing spend on frozen foods.
But B&G chief executive Robert Cantwell said yesterday that he plans to double the amount General Mills has been spending on marketing the Green Giant brand.
“In General Mills, Green Giant was an important brand, but they had a different direction,” Cantwell said on a conference call, adding, “It makes more sense under B&G's ownership and we're going to pay a lot more attention to it.”
Green Giant, with a portfolio of more than 160 products, is the second-largest frozen foods brand by market share in the United States and the largest in Canada.
B&G said it expected the acquired businesses would generate annual sales of about $550m and add 60 cents per share to its profit.
Investors welcomed the news. B&G shares rose as much as 14 per cent, to a 14-month high, yesterday.