Dive Brief:
- B&G Foods sold its Green Giant U.S. canned vegetable business to Seneca Foods for an undisclosed amount. The sale does not include Green Giant frozen, Green Giant Canada or the Le Sueur brand.
- Seneca, a processor of branded and private-label packaged fruits and vegetables, said it has co-manufactured the shelf-stable Green Giant products in the U.S. for several years.
- B&G, once a serial acquirer whose brands include Crisco, Ortega and Cream of Wheat, has sold assets recently to focus its business and reduce its long-term debt. In announcing the deal, B&G CEO Casey Keller said the divestiture is a “critical step” to prioritize categories and brands where the company can drive valuation growth.
Dive Insight:
In explaining the deal to analysts, Keller said canned vegetables are a mature category with high working capital needs. B&G would have to increase debt to finance seasonal inventory, which is packed and held for an entire year. The business also has few synergies with the company’s Green Giant frozen portfolio. The divestiture will “modestly” improve B&G’s margins and debt, he said.
It’s the second deal in the last year for New Jersey-based B&G. In late 2022, the food maker sold Back to Nature to Barilla America.
While B&G has not shied away from a deal when the timing or price is right — it sold Pirate Brands, the maker of Pirate’s Booty and other better-for-you snacks to Hershey for $420 million in 2018 — divestitures have been unusual for a company that until recently was more likely to buy a business than sell one.
The sales are likely not the last for B&G. Keller told Wall Street on Wednesday that B&G is looking in its portfolio at “businesses that have lower margin and cash flow, higher working capital complexity, or do not fit with our core capabilities and business unit structure.” The Green Giant and Back to Nature sales fit squarely within that strategy.
“We have a target list being actively worked to reshape and focus the portfolio with the expectation that the proceeds from any divestitures would primarily be used to reduce long-term debt,” Keller noted.
B&G’s deal with Seneca brings together two companies that have worked closely together for years. With Seneca doing co-manufacturing for B&G already, the transition should be pretty seamless for both businesses.
In addition, Seneca already works with beans, peas and corn, among other commodities, that B&G also has in its Green Giant cans. Seneca will likely be in a position to tap into synergies when it comes to purchasing these ingredients as well as packaging and shipping them to retailers.
