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Will General Mills be the next Minnesota Fortune 500 company lost to a takeover?

General Mills, one of Minnesota’s premiere Fortune 500 companies, made the news this week with renewed speculation that the company is ripe for a takeover.  According to the Star Tribune, the “Brazilian billionaire who helped merge Kraft and Heinz last year could have General Mills in his sights next.”

Losing General Mills would, of course, be a substantial blow to Minnesota.

The most immediate blow would be felt from the loss of high-paying corporate management jobs that would either be eliminated or moved to the location of the new headquarters.  When AlliedSignal acquired Minneapolis-based Honeywell in 2000, they kept the Honeywell name and moved the headquarters to Morristown, New Jersey.  This resulted in an immediate loss of around 1,000 corporate jobs.

While a company like General Mills might maintain a substantial presence in Minnesota after being acquired, over time more jobs would likely disappear due to cutbacks or relocations.  Maybe the largest employment loss from losing General Mills would stem from the loss of a large company in the business of acquiring other companies.

A company like General Mills is usually on the acquiring side of a deal, which can be very good for Minnesota’s economy.   For instance, in 2014, General Mills acquired Annie’s, the popular natural and organic food company, for $820 million.  In recent years, the company has also made inroads in international markets through acquiring Parampara Foods in India, Yoki in Brazil, and a controlling interest in Yoplait.

While most of the jobs at these acquired companies will likely stayed put, the acquisitions mean the addition of high paying jobs at General Mills to manage the new product lines.  These acquisitions and others helped add 1,000 jobs in Minnesota between 2000 and 2015.  On top of those company jobs, a growing General Mills creates additional Minnesota jobs when the company hires outside contractors to meet growing demand for professional and other services.

Acquisitions are a much larger part of UnitedHealth Group’s growth story.  The company, now Minnesota’s largest by revenue, has grown from 29,000 employees in 2000 to 170,000 in 2016.  While most of that growth occurred outside Minnesota, UnitedHealth Group’s employment within the state grew from 5,000 to 15,000 employees.  Those additional 10,000 jobs are among the best paid jobs in the state.

By contrast, Honeywell employed about 7,000 people in Minnesota prior to being acquired.  Though the company still maintains a strong presence in Minnesota, it now employs 3,500 Minnesotans, half the number it employed 15 years ago.   Over the period Honeywell trimmed these jobs in Minnesota, the company acquired over 60 companies, the benefits of which clearly accrued outside Minnesota.

Losing a headquarters doesn’t always translate to a loss in jobs.  Nearly 20 years after Wells Fargo acquired Norwest, the bank employs 20,000 people in Minnesota, about double the people employed by Norwest before its acquisition.

Unfortunately, Wells Fargo is the exception.  Losing a headquarters almost always results in a loss of the state’s highest-quality, highest-paying jobs.  On top of the jobs, the state loses the tax revenue and charities lose donations from both the decline in jobs and the loss of the corporate presence.

From year to year, Fortune 500 headquarters do come and go from Minnesota.  Over the years Minnesota has gained more than it has lost.  Myles Shaver, a professor at the Carlson School of Management at the University of Minnesota, studies the state’s unusual amount of corporate headquarters.  He found that, since 1955, Minnesota gained forty Fortune 500 headquarters and lost thirty-one.

In 2010, Minnesota boasted twenty-one Fortune 500 companies, the most in the state’s history and the most per capita in the country.  As cycles go, it should not be too surprising if the state were to drop from this peak and, sure enough, it did.

Though some loss might be expected, the actual loss is concerning.  Since 2010, Minnesota lost four Fortune 500 companies.  PepsiAmericas was acquired by Pepsico.  Alliant Techsystems relocated its headquarters to Arlington, Virginia.  Nash Finch was acquired by Spartan Stores, creating SpartanNash with headquarters in Grand Rapids, Michigan.  Medtronic moved its headquarters to Dublin, Ireland.  And adding to these losses, Abbot is now in the process of acquiring St Jude Medical, which will drop the number of Minnesota-based Fortune 500 headquarters to 16.

Individually, none of these losses present any sort of crisis.  Practically speaking, Medtronic’s headquarters remains in Minnesota.  The move was largely in name only to take advantage of lower taxes.  The other four companies were among the smallest Fortune 500s, all ranking 400 or lower in 2010.

Though smaller companies, these are not insignificant losses.  Combined, the losses put a number of high-quality Minnesota jobs at risk.  Moreover, St. Jude Medical—the company with the strongest growth prospects—won’t be Minnesota’s next Fortune 100 company.

Add General Mills to the list and this negative trend does start looking like a crisis.

As Bill Blazar, senior vice president of public affairs for the Minnesota Chamber of Commerce, told the Start Tribune:

From the perspective of our business community and economy, the headquarters companies, whether publicly held or not, make the difference between what we have today and becoming a cold Omaha.  It’s a big deal to have them here. Nobody should underestimate the consequences of losing one.

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