This website uses cookies to ensure you have the best experience. Learn more

General Mills And Pillsbury Essay

1292 words - 6 pages

General Mills Acquisition of Pillsbury from Diageo PLC

This case discusses the acquisition and financial proposal of Pillsbury to General Mills from Diageo PLC. The deal involves three main parts:
1. Diageo receiving 141 million shares of General Mills stock. At the time the stock price was $38.
2. GM would assume $5 billion of Pillsbury’s debt.
These two points make the deal worth about $10 billion for Pillsbury if sold to General Mills.
3. The third and most interesting part is a contingent clause valued at up to $642 million

The contingent clause was created because originally Diageo wanted more for Pillsbury – $10.5 billion. GM didn't want to budge from $10 ...view middle of the document...

As such they may have been looking to offload there non-core entities such as Pillsbury.

SWOT Analysis for General Mills
Strength * Recognizable name brand * Investment grade bond rating | Weakness * Difficult times for domestic growth. Market saturation |
Opportunity * Pillsbury means a larger product portfolio domestically and internationally * With Pillsbury they could realize operational efficiencies in areas such as supply chain and marketing | Threats * Acquiring Pillsbury means assuming more debt could jeopardize bond rating * Diageo could control 33% of their company * Pillsbury deal means opportunity costs. Resources tied up in this acquisition for some time. Limits any new product lines or R&D opportunities. * Strong competition from companies like Kraft and Sara Lee |
SWOT Analysis for Diageo
Strength * Market leader in beverage industry * Strong financial position | Weakness * Burger King and Pillsbury have been a drag on earnings |
Opportunity * Pillsbury deal wipes $5 billion in debt off the books * Pillsbury sales means 33% ownership in GM and allows influence of management decisions | Threats * Pillsbury deal means opportunity costs. Resources tied up in acquisition for some time. Limits new product lines or R&D opportunities. * Selling Pillsbury means less diversification and more risk |

Growth and Synergies for GM and Pillsbury
Consummating this deal would essentially double the size of GM. Pillsbury revenues in fiscal year 2000 were $6.1 billion and GM's were $7.5 billion. This would allow GM to gain much needed shelf space in grocery aisles and give them opportunities to maximize advertising. By integrating the Pillsbury's product lines with existing operations, GM could take advantage of synergies in administrative and production areas such as supply chain costs. Overlapping functions such as marketing could be combined and opportunities for staff and resource reduction could save costs while maintaining high levels of productivity. GM will be handling a much larger volume of materials and products and cost reduction opportunities in the supply chain could prove very beneficial. GM could negotiate lower costs with their partners or threaten to switch to other low cost vendors.

Contingent Payment
Part of the agreement between General Mills and Diageo included a contingent payment. The terms of this payment specify that up to $642 million be paid to General Mills at the first anniversary of the deal closing, depending on the stock price. If the stock price is $42.55 or above, General Mills will receive the full $642 million. In this case, GM’s acquisition cost will only total $9.91 billion. However, from Diageo’s perspective, it will actually be receiving $10.5 billion as GM’s stock appreciated in value to $42.55/share for their 141 million shares. If the stock price is $38.00 or less, General Mills will only receive...

Other Essays Like General Mills and Pillsbury

General Mills Essay

642 words - 3 pages General Mills, Inc Summary General Mills is an American company that specializes in the production, packaging and distribution of food products. The company has managed to acquire a significant share of the market through mergers and acquisition. Currently, the company controls about 31 percent of the market. The industry is characterized by a moderate to low level of competition. The main competitors include Groupe Danone, Kellogg, and

List of Companies Essay

2873 words - 12 pages . Shakarganj Mills Ltd. 3. Al-Asif Sugar Mills Ltd. 31. Sindh Abadgar's Sugar Mills Ltd. 4. Al-Noor Sugar Mills Ltd. 32. Tandlianwala Sugar Mills Ltd. 5. Ansari Sugar Mills Ltd. 33. United Sugar Mills Ltd. 6. Baba Farid Sugar Mills Ltd. 7. Bawany Sugar Mills Ltd. 1. Benz 8. Chashma Sugar Mills Ltd. 2. Clover Pakistan Ltd. 9. Crescent Sugar Mills And Distillery Ltd. 3. Haroon Oils Ltd. 10. Dewan Sugar Mills Ltd. 4. Indus

General Mills Profit Drops 25%

524 words - 3 pages 2. “General Mills Profit Drops 25%”, Published on September 17, 2014, WSJ This article explained General Mills tried against tough industrywide environment, while company performed even worse than same term in last year in core business with announce fresh deal. With announce plan to acquire Annie’s, an organic-food marker, with 37% premium to the share price in the deal. Because organic and natural foods is more attraction than traditional

Rte Cereal Case Summary

1646 words - 7 pages Executive Summary: Ready-to-Eat Breakfast Cereal Industry in 1994 From 1950s to the 1980s, the ready-to-eat (RTE) cereal industry was concentrated with three companies dominating the volume market share: Kellogg, General Mills, and General Foods (acquired by Philip Morris in 1985 – makers of post), with volume market share that hovered around the 30s, 20s, and 10s, respectively. Quaker, Nabisco, and Ralston held single digit volume market

Case Questions

974 words - 4 pages after a successful launch. 5. How would your analysis change if the costs of launching Davanrik for weight loss were $225 million instead of $100 million as given in the case? Case #4: Diageo Plc Questions 1. How has Diageo historically managed its capital structure? 2. What is the static tradeoff theory (textbook version)? How would you apply it to Diageo’s business prior to the sale of Pillsbury and spinoff of Burger King? 3. Why is Diageo

Light Calcium Ball Mill for Rent

632 words - 3 pages , process for calcium carbonate; IME crushing machinery; » calcium carbonate mines in pakistan used calcium carbonate ball mill sale in many industries from agriculture to light and heavy industries, so the calcium plant for rent in » wet grinding of calcium carbonate technology Zenith Ball mills are role in many industries from agriculture to light and heavy industries, so the calcium carbonate mill for calcium grinding caco3 in paper

Quality Manager

2536 words - 11 pages has knowledge of non-public information. Either way, this information, gaining money, or avoiding a large loss, is considered illegal. The illegal kind of Insider Trading is the trading in a security, the buying or selling a stock, based on material information that is not available to the general public. (Coffee Jr) It is prohibited by the US Securities and Exchange Commission (SEC) because it is unfair and would destroy the securities

Just viewing a report

565 words - 3 pages exact amount you earn as a transcriptionist will depend on the company you’re working for, how much work is available, and of course your speed and skill level. In general, most companies that are willing to accept beginners do not pay as well as the companies that require past transcription experience. While Mills translated her rate for me, note that transcription companies usually pay a rate per audio hour or a rate per page, although the

Marketing

934 words - 4 pages company has reached its maturity stage and for this project it is General Mills cake-mix brand. It is the quest of reviving the sales levels of the product “X” that this research will be undertaken to gather information from all the public of the company on the modes that should be selected to improve the product “X”. Purpose for the Research Project: It is through this research that the company will be able to know the areas of product “X” that

How Patent Mill Works and Used in Mining

581 words - 3 pages . Currently widely used SF flotation machine, XJ-type flotation machine than inspiratory capacity, energy consumption, impeller and wear plate light and so on. JJF flotation machine available at the lower part of the slurry tank form a cycle, than the XJ-type flotation machine with low energy consumption, less wear, easy to automatic control. SJ-type general and JJF flotation machine to form a coalition unit.There are different sizes of ball mills

Specialized Taxation

766 words - 4 pages EXPENSES Malayan Weaving Mills Sdn Bhd v Director General of Inland Revenue The Case Issues: Whether the provision made for retirement benefits that had been taken into account in the sale of the appellant’s printing and dyeing mill was allowable or not allowable (capital expenditure or revenue expenditure) under s33(1) of the Income Tax Act 1967. The Facts: In Malayan Weaving Mills Sdn Bhd vs Director General of Inland Revenue

Related Papers

General Mills’ Acquisition Of Pillsbury From Diageo Plc

1331 words - 6 pages General Mills’ Acquisition of Pillsbury from Diageo PLC General Mills is a major manufacturer and marketer of consumer foods in US. On December 8, 2000 the management of General Mill purposed to acquire Pillsbury from Diageo in order to create more value from earning growth. This deal required General Mills to issue new common share to exchange for Pillsbury. If the deal was executed, Diageo would become the largest shareholder for General Mills

General Mills Company I Essay

1496 words - 6 pages characters that was memorable with them was Betty Crocker, Rocky and Bullwinkle, the lone Ranger and the Pillsbury Doughboy after what had happened to the Wheaties. Wheaties was the breakfast of Champions that was sponsoring baseball radio broadcast that the movie script in 1933. General Mills have a postwar consumer that is interesting in convenience complemented of the adverting efforts. After World II, the company continued to refine the promotion

Accounting Case Study On General Mills

1628 words - 7 pages 2002 was when General Mills purchased Pillsbury.28. At the end of 2002, the company's most important assets were: inventories, goodwill, receivables, and land, buildings, and equipment. Other resources that might be important that aren't reported on the balance sheet are the skills and level of intelligence of the management and the employees, as well as the value of the brand name29. If asked to assess the company's financial performance of

Häagen Daz In China Essay

1015 words - 5 pages Mahoney, Managing Director EP China consulting group Häagen Dazs at a glance 1976: opened the first Häagen-Dazs shop. 1996: The first cafe was opened in Shanghai. 1983: The brand is introduced in Hong Kong. 1920´s: Mattus started selling fruit ice and ice cream pops from a horse-drawn wagon in the Bronx in NY. 2001: The Pillsbury Company acquired by General Mills. The U.S. and Canada HD business licensed to Nestlé. 1960 & 1961