Boston, MA 09/09/2014 (wallstreetpr) – General Mills, Inc. (NYSE:GIS) announced its plan to take-over Annie’s Inc (NYSE:BNNY) for $820 million on Monday.
General Mills is set to acquire one of the biggest organic and natural food products’ producers, the company announced. The deal is announced at a time when the organic food market is showing surging sales in the U.S. Sales in the country jumped as much as 11.5%, to $35.1 billion, in 2013, as reported by the Organic Trade Assn.
General Mills, Inc. (NYSE:GIS) aims to mark a bigger presence in the sector with this acquisition, The Wall Street journal reported. The deal will help the company to bag Annie’s wide product range, including Häagen-Dazs ice cream, Green giant preserved vegetables, and Chex and Cheerios cereals.
Packaged Food Versus Organic Food
The move underlines the efforts that large scale food companies are making to cope with the increasing preference of people towards food products made out of more natural ingredients. Consumers in the U.S. have been increasingly reluctant to spend on food products such as Cereals, in particular. General Mills, Inc. (NYSE:GIS) has also been fighting to increasing sales, like its peers dealing with traditional packaged food. Hence, in line with the industry moves, it agreed to offer Annie’s Inc (NYSE:BNNY) $46 per share on its Monday closing price, as per the deal. With the announcement, Annie’s stock price jumped to approximately $46, while General Mills surged to $54.21.
Entering Growing Markets
On one hand where the packaged food industry is reporting a rapid decline in sales, General Mills’ Chief Operating Officer, Jeff Harmening, reported a growth at compound rate of as much as 12% in the organic food market. Although Annie’s Inc (NYSE:BNNY) operating business is small as compared to General Mills, Inc. (NYSE:GIS), it had reported earning revenue of as huge as $17.9 billion in its previous fiscal year. The acquisition of the Berkeley, California-based food company has shown rapid growth since it was established in 1989 and demonstrates the potential to benefit General Mills.
