Add Annie’s Homegrown to the list of General Mills brands like Cheerios, Betty Crocker and Green Giant, because they just sold to the food giant for $820 million.
Unlike other organic brands like New Chapter, which sold to Procter & Gamble a couple of years ago, Annie’s has been straddling both sides of the fence, producing both organic and "natural" products, such as its line of salad dressings.
Also, before Annie’s went public in 2012 (NYSE: BNNY), it was mostly owned by a private equity firm. So, it’s been quite awhile since the company was a small, independent organic player.
Read our article, Annie’s Goes Public, Proctor Gamble Buys New Chapter.
Like most organic companies, Annie’s sold for a nice premium at $46 per share. – 37% more than its closing stock price.
As always, those of us who want to buy from small organic companies have to look elsewhere, while Annie’s grows into mainstream markets thanks to the deep pockets of its new parent company. Will Annie’s sustainable values slip away and its ingredients be more diluted for the mighty dollar General Mills seeks?
While General Mills had to be pressured to step up action on climate change (the bottom of the heap of the big 10 food companies), it likes to own organic firms. It also owns Muir Glen Organic, Small Planet Foods, and Food Should Taste Good.
"This acquisition will significantly expand our presence in the US branded organic and natural foods industry, where sales have been growing at a 12% compound rate over the last 10 years," says Jeff Harmening of General Foods.
Sales are sluggish in the conventional packaged food industry and General Mills expects the deal to boost its profits in the first year. Annie’s stock had fallen 22% this year because of higher costs for ingredients, which meant lower profits.
In July, General Mills pledged to advocate for climate action and to clean up operations and supply chains … as they also spend big to oppose GMO labels – a key issue for an organic foods company like Annie’s.
General Mills spent $2.1 million to defeat GMO label referendums in California (Prop 37, in 2012) and Washington State (I-522 in 2013). Represented by the Grocery Manufacturers Association, which leads the fight against labels for the food industry, they are suing Vermont for passing GMO labeling legislation and are pushing a national law that would make it impossible for states to pass labeling bills.
Last year, Earthbound Farm, the largest organic produce grower in the US, sold to WhiteWave.
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