Stock Monitor: Blue Buffalo Pet Products Post Earnings Reporting
LONDON, UK / ACCESSWIRE / February 26, 2018 / Active-Investors.com has just released a free research report on General Mills, Inc. (NYSE: GIS) ("GIS"). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/'symbol=GIS as the Company's latest news hit the wire. On February 23, 2018, the Company announced that it has entered into an agreement to acquire Blue Buffalo Pet Products, Inc. (NASDAQ: BUFF) ("BUFF"). The all-cash deal has an enterprise value of approximately $8 billion. The acquisition marks the entry of the Company into the high growth pet food market, especially the niche area of wholesome and natural pet food segment. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, General Mills and Blue Buffalo Pet Products most recent news are on our radar and our team decided to put out a fantastic report on the company that is now available for free below:
www.active-investors.com/registration-sg/'symbol=GIS
www.active-investors.com/registration-sg/'symbol=BUFF
Transaction details
GIS has offered to pay $40 in cash for each share of BUFF. The offer price is at a 23% premium of BUFF's 60-day volume weighted average price (VWAP). The transaction has been approved by the Boards of Directors of both companies. The deal is expected to close by end of GIS's fiscal year (May 27, 2018) subject to receiving regulatory and other closing conditions. The transaction does not require BUFF's shareholders' approval as the majority shareholders (Invus, L.P. and founding Bishop family shareholders) who own more than 50% stake in BUFF have already approved the transaction. GIS plans to finance the acquisition using a mix of cash in hand, fresh debt and equity of approximately $1 billion.
Once the transaction is completed, BUFF will be added as a new business unit of GIS in additional to its existing business units - North American Retail; Convenience Stores & Foodservice; Europe & Australia; and Asia & Latin America. GIS plans to maintain BUFF's headquarters at Wilton, Connecticut and continue its manufacturing and R&D facilities at Joplin, Missouri, and Richmond, Indiana. Billy Bishop will continue as the CEO and helm the operations of BUFF and will report to Jeff Harmening, Chairman and CEO of GIS.
Commenting on the acquisition of BUFF, Jeff Harmening, Chairman and CEO of GIS, said:
"The addition of BLUE to our family of well-loved brands provides General Mills with the leading position in the large and growing Wholesome Natural pet food category and represents a significant milestone as we reshape our portfolio to drive additional growth and value creation for our shareholders."
Billy Bishop, CEO of BUFF, added:
"General Mills will be a tremendous home for our BLUE brand as our talented team of over 1,700 'Buffs' joins this new extended family... This transaction creates significant, immediate value for our shareholders, as it recognizes the strength of our competitively advantaged business model."
Value proposition for GIS
The transaction is expected to be immediately accretive to net sales growth and operating margin profile of GIS. The deal is expected to be neutral to cash EPS in fiscal 2019 and accretive in fiscal 2020, excluding onetime transaction costs. The deal is expected to result in cost synergies of over $50 million.
The deal marks the entry of GIS in the $30 billion US pet food market which has witnessed consistent 3% to 4% growth. Out of this, the Wholesome Natural segment has a 10% share of the pet food market in volume and approximately 20% in value. BUFF is the leader in the Wholesome Natural segment and has recorded double-digit growth in the last three years.
BUFF's brand BLUE is one of the strongest brands in the pet food marked and is the number one in the Wholesome Natural segment with four times higher sales than the next contender in the same segment. It has a loyal customer following specially amongst millennials. In spite of its market dominance, BLUE brand reaches only 3% pets in US and therefore has tremendous growth opportunities.
Brand BLUE is the number one pet food brands which is growing through ecommerce channels with net revenues from the ecommerce channels in 2017 of over $250 million. This was a 75% increase compared to net revenues in 2016.
GIS would be able to leverage its existing expertise and resources in sales, marketing, advertising, supply chain, R&D, innovation, and environmental stewardship to strengthen BUFF's distribution and supply chain for better productivity and profits. These initiatives are expected to result in meaningful synergies in the future.
GIS expects to maintain investment grade even after the acquisition and continue to pay its quarterly dividends of $0.49 per share. However, the Company has suspended its current share repurchase program till it manages a comfortable debt situation post the completion of the deal.
About Blue Buffalo Pet Products, Inc.
Wilton, Connecticut-based BUFF was founded in 2002 and is one of the fastest growing major pet food Company in US. It manufactures pet food and treats for cats and dogs that are natural and healthy using highest quality natural ingredients. Its food and treats are available under the BLUE brand line of products which includes BLUE Life Protection Formula, BLUE Wilderness, BLUE Basics, BLUE Freedom and BLUE Natural Veterinary Diet. BLUE is the number one pet food brand in the natural category and recorded net sales of $1.275 billion in FY17. The Company has witnessed compound annual net sales growth of 12% and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) growth of 18%.
About General Mills Inc.
Minneapolis, Minnesota-based GIS is a leading global food Company and the third-largest natural and organic food producer in US. Its focus is on five growth categories - cereal, snacks, yogurt, convenient meals, and super-premium ice cream, which together contribute to over 75% to the Company's total global net sales. Some of the leading brands of the Company include Cheerios, Annie's, Yoplait, Nature Valley, Fiber One, Häagen-Dazs, Betty Crocker, Pillsbury, Old El Paso, Wanchai Ferry, Yoki, etc. The Company's products are sold across 100 countries in six continents. The Company's consolidated net sales for FY17 was $15.6 billion. The Company also earned revenues from its joint ventures which were more than $1 billion in the same period. The Company has over 38,000 employees.
Stock Performance Snapshot
February 23, 2018 - At Friday's closing bell, General Mills' stock dropped 3.59%, ending the trading session at $52.98.
Volume traded for the day: 11.87 million shares, which was above the 3-month average volume of 3.79 million shares.
After last Friday's close, General Mills' market cap was at $31.27 billion.
Price to Earnings (P/E) ratio was at 19.40.
The stock has a dividend yield of 3.70%.
The stock is part of the Consumer Goods sector, categorized under the Processed & Packaged Goods industry. This sector was up 1.3% at the end of the session.
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