Green Giant, one of the state's best-known brands for nearly a century, is moving to New Jersey.
General Mills Inc., which picked up Green Giant in its 2001 merger with Pillsbury Co., agreed Thursday to sell the business to B&G Foods for $765 million in cash.
The deal is B&G's largest purchase and will nearly double the company's size. It also immediately raises B&G's profile with retailers as one of the biggest purveyors of vegetables in North America.
For General Mills, Green Giant's $585 million in annual sales represented only about 4 percent of its overall business. The company put it up for sale earlier this year as part of a broader effort to focus on faster-growing businesses.
Green Giant's frozen and canned vegetables also have come under competitive pressure, and its sales were about $100 million higher several years ago. General Mills earlier this year took a $260 million charge it said was related to the value of Green Giant.
Even so, General Mills Chief Executive Ken Powell said earlier this year Green Giant is "a good, profitable brand."
The sale is an "acknowledgment of the challenges facing the frozen vegetable business, which has been losing out as consumers maintain a penchant for fresh fare," Morningstar analyst Erin Lash wrote in a research note.
Other major consumer product companies — including Campbell Soup, Kraft and Unilever — have also "shed noncore brands to focus resources on the highest return opportunities," Lash wrote.
B&G Chief Executive Robert Cantwell said the company will double what General Mills has spent marketing Green Giant products in recent years.
"It makes more sense under B&G's ownership," Cantwell said. "We're going to pay a lot more attention. It's very important to us."
General Mills said it will use proceeds from the sale to repurchase shares and pay down debt.
Lash said she believes the company "will look to free up resources to extend its reach in the U.S. natural and organics space, similar to the Annie's deal."
Alexia Howard, a stock analyst at Bernstein Research, said, "We view the transaction as positive as General Mills is focusing on portfolio changes in a rapidly changing consumer environment."
B&G also picked up from General Mills the Le Sueur vegetable line, which is chiefly sold in Canada, and a factory in Irapuato, Mexico, that's responsible for about one-third of Green Giant's frozen vegetable products. The 1,100 workers at that plant will become employees of B&G.
None of the Green Giant staff at General Mills' headquarters in Golden Valley was included in the transaction. B&G said it intends to hire 40 to 50 people at its Parsippany, N.J., headquarters to help its existing staff manage Green Giant.
A General Mills spokeswoman said it was unclear how Minnesota employees would be affected by the sale and added the firm is working to minimize the number who would lose their jobs. "We expect that number to be small," she said.
Seneca connection remains
In the 1990s, Pillsbury partnered with Seneca Foods for the production of canned vegetables under the Green Giant label, an affiliation General Mills has maintained and Cantwell indicated B&G is likely to do as well.
Seneca operates several canning plants in Minnesota, including ones in Blue Earth, Glencoe and Montgomery that were originally built by Green Giant when it was a stand-alone company.
General Mills also contracts with other firms for about one-third of Green Giant's frozen vegetables. It produces the rest at a site in Belvidere, Ill., where work will continue for at least two years under B&G. General Mills makes other products in Belvidere, and the companies will work to decide how to proceed with vegetable production there after the two-year period.
B&G was one of at least four firms to express interest in the Green Giant business, which General Mills put on the block earlier this year. Private equity firms Cerberus Capital Management and Platinum Equity, as well as French food group Bonduelle SCA, also made offers, Reuters reported last week.
Rooted in Minnesota
Green Giant's roots trace to the Minnesota Valley Canning Co., which started in 1903 in Le Sueur, Minn. The firm was an innovator in the vacuum packing of vegetables in cans in the 1920s.
It first put a giant on the label of its cans in 1928 and, not long after, gave the giant green skin. In 1935, Leo Burnett, a Chicago advertising executive who was a pioneer in developing icons for advertisers, began calling him the Jolly Green Giant. In 1950, the company renamed itself the Green Giant Co.
Green Giant was such a fixture in popular culture in the 1950s and 1960s that the Kingsmen, best known for "Louie Louie," had a top 10 hit in 1965 with a novelty tune about the giant's dating woes. The company initially objected to the song, according to a post on General Mills' history blog. Later, either the company or contract distributors gave the band a plastic prop of the Green Giant to use onstage.
Pillsbury purchased Green Giant Co. in 1979 and moved its corporate operations from Le Sueur to Minneapolis. It closed the original Green Giant processing plant in Le Sueur in 1994. Today, Seneca has a small presence in the town. The Le Sueur Museum has a room devoted to the company's history.
The most visible presence of Green Giant in southern Minnesota is about an hour away in Blue Earth, where civic leaders in 1979 built a 55-foot-tall fiberglass statue of the Jolly Green Giant to greet visitors driving into town from Interstate 90. Seneca's plant there produces cans of corn and peas for Green Giant.
General Mills' stock closed Thursday at $57.61, up 79 cents. B&G's stock rose 12 percent to close at $33.97.