General Mills Buys Annies For $46 Per Share

On Monday the renowned cereal manufacturer General Mills announced the acquisition of organic food producer Annie’s at a price of approximately $820 million. The strategy is to develop the company’s presence in the natural foods market.
“The acquisition will significantly expand our presence in the U.S. branded organic and natural foods industry, wher sales have been growing at a 12 percent compound rate over the last 10 years,” reports Jeff Harmening, executive vice president and chief operating officer of General Mills. He continues, “Annie’s competes in a number of attractive food categories, with particular strength in convenient meals and snacks—two of General Mills’ priority platforms.”
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This would be wise move for General Mills since Annie’s shares jumped up by 37 percent last year during the extended hours trading after they made the initial announcement. While General Mills shares did not change, the shift on their new acquisition shows the power that company has and how well the public believes the partnership will be.
And their profits are up by at least 20 percent from the same time last year. The deal should finalize later this year but in the meantime General Mills will pay $46 per share, cash; this price represents what Annie’s claims to be a 51 percent premium over their 30-day average closing price of $30.47, which posted on September 5, 2014.
Many people may recognize the Annie brand for their famous rabbit-shaped mac and cheese but their $204 million in net sales last year signifies they are not just a one-trick pony. The Berkley CA-based food company boasts the marketing of nearly 150 products with more than 35,000 retail locations across the United States and Canada. They know that “partnering with a company of General Mills’ scale and resources” will definitely help to maximize stockholder value and improve expansion opportunities.