Consumer foods giant General Mills Inc. (GIS) completed its previously announced takeover of organic and natural food company Annie's, Inc. for $46.00 per share.
General Mills entered into a definitive agreement to takeover Annie’s in Sep 2014. Post takeover, Annie’s products, especially its convenient meals and snacks join General Mills’ already rich portfolio.
Annie’s, founded in 1989, recorded 20% sales growth in the last fiscal year. General Mills' convenient and snacks portfolio currently includes Cascadian Farms, Muir Glen, Food Should Taste Good and Larabar brands. The company’s share price rose around 1.5% in after-hours trading.
General Mills is hoping that the addition of Annie’s’ organic snacks will help it turn to around revenues amid sluggish consumer spending. Its two most important categories — cereals and yogurt — have not done too well lately, which led to a dismal performance in 2014.
General Mills invests in new businesses through complementary acquisitions that increase its marketing strength. In fiscal 2012, the company made four strategic acquisitions — Yoplait International and Food Should Taste Good in the United States, Parampara Foods in India, and Yoki in Brazil. All these acquisitions strengthened General Mills’ presence in some fast-growing food categories and increased its sales and profits in fiscal 2013 and 2014.
The company continues to be on the lookout for complementary tuck-in opportunities, especially in the emerging countries of India and Indonesia and in areas complementary to its five global platforms.
General Mills currently carries a Zacks Rank #3 (Hold). Better-ranked food stocks include Con Agra Foods Inc. (CAG), McCormick & Company Incorporated (MKC) and The Hain Celestial Group, Inc. (HAIN). All these stocks have a Zacks Rank #2 (Buy).
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