General Mills Case
Introduction
In the late 1990’s and early 2000’s the food industry was struggling with weak sales and low inflation which caused waves of consolidation among some of the largest firms in the industry. In 1998 General Mills studied areas of potential growth and value creation for their company which lead to small acquisitions of other firms. Looking to further grow their company, in December 2000, management of General Mills made a recommendation to its shareholders that they authorize the creation of more shares of common stock and approve a proposal for the company to acquire Pillsbury Company, a producer of baked goods, from Diageo PLC.
Company Information
General Mills
General Mills is one of the leading food companies in the world. It is the largest producer of yogurt and the second-largest producer of ready-to-eat breakfast cereals in the United States. The company is primarily engaged in the manufacturing and marketing of branded consumer foods. General Mills also provides branded and unbranded food products to the food-service and commercial baking industries. The company owns many product lines that are marketed under high profile names such as Betty Crocker, Yoplait, Cheerios, and Big G.
In 2000, General Mills annual revenue was $7.5 billion and their market capitalization was about $11 billion. They pursued expansion efforts overseas through joint ventures with Nestle and PespsiCo as their brands are mature and offered low organic growth. In order to stay competitive in the food industry General Mills has begun to acquire smaller firms. In acquiring Pillsbury, General Mills would rank as the 5th largest food company in the world.
Diageo
Diageo is one of the world’s leading companies in the branded beverage alcohol industry. It is engaged in the production and distribution of branded premium spirits, beer and wine. Some of their major brands include Smirnoff, Johnnie Walker, Captain Morgan, Baileys Original Irish Cream, J&B, Tanqueray,
In the late 1990’s and early 2000’s the food industry was struggling with weak sales and low inflation which caused waves of consolidation among some of the largest firms in the industry. In 1998 General Mills studied areas of potential growth and value creation for their company which lead to small acquisitions of other firms. Looking to further grow their company, in December 2000, management of General Mills made a recommendation to its shareholders that they authorize the creation of more shares of common stock and approve a proposal for the company to acquire Pillsbury Company, a producer of baked goods, from Diageo PLC.
Company Information
General Mills
General Mills is one of the leading food companies in the world. It is the largest producer of yogurt and the second-largest producer of ready-to-eat breakfast cereals in the United States. The company is primarily engaged in the manufacturing and marketing of branded consumer foods. General Mills also provides branded and unbranded food products to the food-service and commercial baking industries. The company owns many product lines that are marketed under high profile names such as Betty Crocker, Yoplait, Cheerios, and Big G.
In 2000, General Mills annual revenue was $7.5 billion and their market capitalization was about $11 billion. They pursued expansion efforts overseas through joint ventures with Nestle and PespsiCo as their brands are mature and offered low organic growth. In order to stay competitive in the food industry General Mills has begun to acquire smaller firms. In acquiring Pillsbury, General Mills would rank as the 5th largest food company in the world.
Diageo
Diageo is one of the world’s leading companies in the branded beverage alcohol industry. It is engaged in the production and distribution of branded premium spirits, beer and wine. Some of their major brands include Smirnoff, Johnnie Walker, Captain Morgan, Baileys Original Irish Cream, J&B, Tanqueray,