Fitch affirms General Mills

Fitch Ratings said it affirmed the credit ratings of General Mills, Inc. and its subsidiary, General Mills Cereals LLC, upon news that General Mills has entered into exclusive negotiations with PAI Partners and Sodiaal to purchase interests in Yoplait SAS and affiliated companies for about €810 million.

The enterprise value for 100% of these entities is €1.6 billion.

The outlook was revised to stable from positive, factoring in expectations that this transaction is likely to close on substantially similar terms and leverage will increase moderately in the near term, Fitch said.

General Mills is familiar with the French packaged foods market and has been marketing its products there for the past half century, Fitch said.

The strategic rationale is sound as Yoplait is one of General Mills' fastest growing brands, the agency said.

But it does increase the company's exposure to slow-growth Western European markets, Fitch added.

The agency said it expects General Mills to partially fund the acquisition with debt given that cash balances are normally in the $400 million to $750 million range.

As a result, debt balances are likely to increase and leverage could be modestly high for the rating category if the purchase is debt funded.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.