General Mills has entered into a definitive agreement to acquire Annie’s, a leading U.S. producer of branded organic and natural food products with net sales of $204 million in its latest fiscal year, completed March 2014. The transaction is valued at approximately $820 million.
Annie’s will join General Mills’ U.S. natural and organic products portfolio, which includes the Cascadian Farm, Muir Glen, Larabar and Food Should Taste Good brands. Net sales for these General Mills brands totaled approximately $330 million in its latest fiscal year, ended May 2014.
Jeff Harmening, General Mills EVP and COO-U.S. retail, said, “This acquisition will significantly expand our presence in the U.S. branded organic and natural foods industry, where sales have been growing at a 12 percent compound rate over the last 10 years. Annie’s competes in a number of attractive food categories, with particular strength in convenient meals and snacks—two of General Mills’ priority platforms. Consumers know and trust Annie’s purpose-driven culture and authentic brand. We believe that combining the Annie’s product portfolio and go-to-market capabilities with General Mills’ supply chain, sales and marketing resources will accelerate the growth of our organic and natural foods business.”
Under terms of the agreement, General Mills will acquire Annie’s for $46 per share in cash. The Annie’s board of directors has unanimously recommended that Annie’s stockholders accept the General Mills offer. General Mills will launch a tender offer within 10 business days to purchase all outstanding shares of Annie’s. General Mills’ offer will be subject to the tender of a majority of Annie’s shares and to certain other customary closing conditions including regulatory approval. The transaction is expected to close later this year.
General Mills intends to fund the acquisition through available credit. The transaction is expected to be accretive to General Mills’ earnings in the first 12 months following completion, excluding certain purchase accounting adjustments, and transaction and integration expenses.
“We are excited about this strategic combination, which will enable Annie’s to expand the reach and breadth of our high quality, great tasting organic and natural products, provide new opportunities for our employees, realize greater efficiencies in our operations, and maximize value for our stockholders,” said John Foraker, CEO of Annie’s. “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.
“Annie’s will remain dedicated to our mission: to cultivate a healthier and happier world by spreading goodness through nourishing foods, honest words and conduct that is considerate and forever kind to the planet,” he added. “Authentic roots, great tasting products, high-quality organic and natural ingredients and sustainable business practices will continue to be the cornerstones of the Annie’s brand.”
Molly Ashby, Annie’s board chair, said, “This transaction is a testament to the great team at Annie’s. Together, they have built a highly successful company around the authentic, mission-driven concept that Annie Withey originated 25 years ago. Annie’s is a pioneer of the new generation of company that does well by doing good, generating great value for all stakeholders. This is strategically the right time to pursue this combination because it brings operational, sourcing and distribution capabilities that enable Annie’s to build on its leadership position in the natural and organic market.”
