Mills buys dollars 450m RJR breakfast

NEW YORK - General Mills is pushing to increase its share of the global breakfast cereal market with the dollars 450m ( pounds 225m) acquisition from RJR Nabisco of its US and Canadian cold cereal lines, including Shredded Wheat and Shreddies, writes Michael Marray.

The Minneapolis group already owns Shreddies and other cereals in the UK, which it acquired in a joint venture with Nestle from Ranks Hovis McDougall in 1990. RHM had bought the brands from Nabisco two years earlier.

The latest deal will thus reunify the global brands formerly owned by Nabisco, which is now controlled by Kohlberg Kravis Roberts, the New York-based buyout specialists. General Mills will market the cereals along with its existing breakfast products in the United States, but is also starting up operations in the Mexican market, which will come under the Nestle joint venture.

That joint venture is also making inroads in continental Europe, where breakfast cereal consumption is far behind Britain. After a period of decline in the late 1980s, the breakfast cereal business is growing again, and sales of General Mills products in Britain have increased by 10 per cent over the past 12 months.