General Mills buys organic mac and cheese maker for US$820M
Minneapolis-based General Mills has been trying to cut costs and has tweaked its recipes as sales stagnate
NEW YORK—Packaged food giant General Mills, Inc. plans to buy Annie’s Homegrown, the maker of rabbit-shaped mac and cheese, for US$820 million, adding more natural and organic packaged offerings as consumers’ tastes change.
General Mills, the company behind classic food brands such as Pillsbury dough, Progresso soups, Yoplait yogurts and Cheerios and Cinnamon Toast Crunch cereal, has been trying to cut cost and has tweaked its recipes as sales stagnate.
Sales have suffered as Greek yogurt and breakfast sandwiches became popular options for the morning meal.
General Mills was slow to realize the growing demand for Greek yogurt, which has more protein than regular yogurt, but it has been adding some other options that it hopes consumers will consider healthier.
Annie’s sales, on the other hand, grew 20 per cent in its latest fiscal year.
General Mills said Annie’s “convenient meals” and snacks businesses were particularly attractive.
Annie’s also makes other pastas, frozen pizzas and snacks like crackers and fruit snacks.
The Minneapolis-based company is paying US$46 per share for Annie’s, which is based in Berkeley, Calif.
Annie’s board endorsed the offer, which is expected to close later this year.
The company went public in March 2012 at US$19 per share.
Annie’s stock jumped 37 per cent in aftermarket trading Sept. 8 to US$45.97.
Its shares have dropped 25 per cent over the past 12 months.
It has dealt with rising costs for organic wheat and noted “material weaknesses” in its financial reporting.
Its auditor, PwC, said in June that it would resign.
General Mills stock rose 99 cents, or 1.9 per cent, to US$54.50 in after-hours trading.
Its shares have gained 8.8 per cent in the last 12 months.