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General Mills to Buy Annie’s Homegrown


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The General Mills empire is about to become slightly larger as the company has agreed to purchase Annie’s Homegrown, a natural and organic food company in a deal for 820 million dollars cash. Annie’s Homegrown has become a staple for customers seeking all natural and organic food in a trend that has gained much support and a solid customer base. The company, better known for their organic line of mac and cheese had made its way onto the grocery store shelves and has continued positive sales. General Mills representatives have cited that with the ever increasing demand for natural and organic foods; buying Annie’s Homegrown would be a solid investment for the company’s future.

The General Mills Empiregeneral mills 2

In the world and world of business there are a multitude of levels for companies to belong to. Some are multibillion dollar international powerhouses of business and commerce and then there are the corporate empires that own just about every brand you have probably ever heard of. The General Mills empire is fantastic and has brand names in its inventory that are billion dollar brands all on their own. Under the current wing of ownership by the General Mills family include Haagen-Dazs, Pillsbury, Cheerios, Cascadian Farm, Green Giant and Progresso amongst many others. General Mills has agreed to purchase Annie’s Homegrown and is looking to add the company to their inventory of successful brands. Jeff Harmening, the General Mills COO for the US released this statement:

“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 compete in a number of attractive food categories, with particular strength in convenient meals and snacks – two of General Mills’ priority platforms.”

general millsAnnie’s Homegrown

Annie’s Homegrown organic food company was founded in 1989 and has quickly made itself into one of the larger organic food suppliers. Last fiscal year the company reported 204 million dollars in food sales featuring over 145 products in over 35,000 retail locations. The popularity of the company and its products is in relation to the rising number of consumers demanding organic and natural products that are healthier for them and their families. The current trend within the realm of organic and natural food has been the backlash of consumers towards companies that have been using genetic manipulation of foods as well as the deterioration of food nutrition and quality. In supermarkets across the country as well as around the world, the organic, natural, and gluten free sections have been growing more quickly than specialty sections have ever before. Annie’s Homegrown has agreed to be purchased by General Mills for a 820 million dollar cash deal that will include a 46 dollar per share premium, which was a 37 percent addition onto the stock’s value.

The deal couldn’t have come at a better time for Annie’s Homegrown. The company had reported a 10 percent increase in revenues yet the company’s profit margins have also dropped. Prior to the announcement of the purchase, Annie’s stock had dropped by roughly 22 percent in comparison to last year. Along with rising ingredient costs and the slowing of the grocery retail market due to sluggish summer sales all helped to contribute to the appeal of being purchased by General Mills.

Consumer Reaction Thus Far

According to the Annie’s Homegrown Facebook homepage there were seemingly negative reactions to the news of the purchase. Many of the company’s followers were expressing outrage to the news that General Mills would be purchasing the company citing that General Mills was one of the companies that opposed the values instilled by the Annie’s Homegrown family. One comment read “Congrats Annie’s! You have just lost thousands of customers!” In response to the backlash exhibited by the organic food’s consumer base, Annie’s Homegrown CEO John Foraker released this statement:

“Powerful consumer shifts towards 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 effectively expand into new channels and product lines in a rapidly evolving industry environment.”

Even though the initial reaction by Annie’s consumer base showed to be negative, the company believes that the doors that will be opened up by partnering with General Mills will take the company and its line of products to new heights. The Annie’s Homegrown leadership is confident that due to the demands of the market and the growing demands for natural and simple made foods will only strengthen the commitment made by General Mills to continue to allows the Annie’s brand to remain true to its core values in the future, as it had done so effectively in the past.

 

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