General Mills To Buy Organic Food Maker Annie's For About $820 Mln

(RTTNews) - Packaged food company General Mills, Inc. (GIS) agreed Monday to acquire organic and natural food maker Annie's, Inc. (BNNY) for $46.00 per share in and all-cash deal valued at about $820 million. The deal will give General Mills a larger presence in the fast growing organic food products market.

"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," said Jeff Harmening, General Mills Executive Vice President and Chief Operating Officer - U.S. Retail.

Annie's, which had annual net sales of $204 million, 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 those General Mills brands totaled about $330 million in the last fiscal year. Annie's will continue to be headquartered in Berkeley, California.

Annie's products range from macaroni and cheese to bunny-shaped cheddar snacks. It has a range of more than 145 products and markets them through over 35,000 retail stores in the U.S. and Canada.

The offer represents a 37 percent premium over Annie's closing price of $33.51 on Monday. The deal is unanimously recommended by Annie's Board of Directors for its shareholders to accept the General Mills offer. Annie's shares are soaring nearly 38 percent in after-hours trading.

The deal closure is primarily subject to the tendering of a majority of Annie's shares to General Mills' offer and to certain other customary closing conditions including regulatory approval.

Minneapolis, Minnesota-based General Mills, the maker of Cheerios and Fiber One cereals, said it will launch a tender offer within ten business days to purchase all outstanding shares of Annie's. The deal is expected to close later in calendar 2014.

General Mills intends to fund the deal through available credit. The deal 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.

The deal will help accelerate the growth of General Mills' organic and natural foods business with the addition of Annie's product portfolio and go-to-market capabilities with General Mills' supply chain, sales and marketing resources.

"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.

Foraker added, "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."

GIS closed Monday's regular trading session at $53.51, down $0.31 or 0.58% on a volume of 1.37 million shares. However, the stock gained $$0.70 or 1.31% in after-hours trading.