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General Mills to Spin Off Restaurant Operations

December 15, 1994

GOLDEN VALLEY, Minn. (AP) _ General Mills Inc. says it plans to spin off its restaurant operations to shareholders, forming a separate company that will operate its Red Lobster chain and other eateries.

Shareholders will receive one share in the restaurant company for each General Mills share they own. The restaurant company’s stock is expected to be listed on the New York Stock Exchange, where General Mills shares are currently traded.

General Mills announced the split Wednesday and said it will allow it to become a ″highly focused″ consumer foods company. Products sold by General Mills include Big G cereals, Betty Crocker desserts, Hamburger Helper dinner mixes and Yoplait yogurt.

General Mills said the restaurant company, which has not yet been named, will be ″the world’s largest full-service restaurant organization.″ Aside from Red Lobster, its restaurants include The Olive Garden and China Coast.

″The restaurant division had weighed down the stock price,″ said John O’Neil, a food industry analyst with Oppenheimer & Co. ″They’re hoping one plus one equals more than two.″

Bruce Atwater, the company’s chairman and chief executive, said General Mills’ board ″believes that separate corporations with highly integrated strategy, organization and incentive programs will produce the strongest growth performance and thereby enhance long-term shareholder value.″

Atwater will retire after the transaction is completed. The split is expected to take place about June 1.

The company’s board elected Stephen W. Sanger, 48, a one-time president of Big G cereals, president and chief executive of the food operation, which will retain the General Mills name.

It named Joe R. Lee, 53, who has led the company’s restaurant business, president and chief executive of the restaurant operation. Both men are expected to be elected chairmen and chief executives of their separate corporations once the split takes place.

Also Wednesday, General Mills reported earnings for its fiscal second quarter. Earnings for the quarter ended Nov. 27 rose to $149.2 million, or 95 cents a share, compared with $140.7 million, or 88 cents a share, in the year- ago period. Sales increased to $2.2 billion from $2.18 billion.

For the first six months of the year, earnings fell to $300 million, or $1.90 a share, from $306.5 million, or $1.92 a share, in the year-earlier period. Sales fell to $4.18 billion from $4.27 billion.

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