General Mills is set to buy US natural and organic food firm Annie’s in a deal worth US$820m.
Jeff Harmening, General Mills’ COO, said the acquisition would “significantly expand our presence in the US branded organic and natural foods industry”.
Annie’s board accepted an offer worth US$46 a share and the transaction is expected to close later this year.
The company will bolster General Mills’ own natural and organic stable, which includes brands like Cascadian Farm, Larabar and Food Should Taste Good.
In the year to the end of March, Annie’s generated annual net sales of US$204m. In the 12 months to the end of May, the General Mills natural and organic division ran up net sales of $330m.
“Annie’s competes in a number of attractive food categories, with particular strength in convenient meals and snacks – two of General Mills’ priority platforms,” Harmening said.
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Annie’s net profit in the year to 31 March was $15.3m, compared to $11.3m a year earlier. Adjusted EBITDA grew 7.9% to $27.3m. However, input costs hit gross margins, which fell 410 basis points to 34.6%.
John Foraker, Annie’s CEO, said a sale to General Mills would boost the business’ distribution. “Powerful consumer shifts toward products with simple, organic and natural ingredients from companies that share consumers’ core values show no signs of letting up. Partnering with a company of General Mills’ scale and resources will strengthen our position at the forefront of this trend, enabling us to more rapidly and efficiently expand into new channels and product lines in a rapidly-evolving industry environment.”
Click here for just-food’s analysis of General Mills’ move for Annie’s.