General Mills Buys Annie's for $820 Million Cash

Annie’s Homegrown, the organic food company known for its mac and cheese and earthy vibe, is joining the General Mills empire. General Mills, whose stable of brands includes Pillsbury, Cheerios, Haagen-Dazs and Nature Valley, said on Monday that it had agreed to buy Annie’s for about $820 million in cash, in a bet on shoppers’ continued demand for natural and organic foods.

dealbook.nytimes.com...

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I know I'm not the only one that both a. cares about what they eat and b. doesn't care to give mega corporations a penny. Wasn't sure where to stick this so here it is.

This really cheeses me off (pun intended). Our first Annie's purchase was because my kids love mac and cheese but I wasn't down with buying Kraft (which we lovingly call "Krap" here) and Velveeta just scares the devil out of me. So, took a gamble on Annie's and we loved it. Half of our pantry snacks are Annie's these days--no joke. Well, one more great food company has just been swallowed by a great whale.

The thing that really blows me away about this is that Annie's had actually managed to take a lot of shelf space on the local Safeway in just its mac and cheese products providing some actual competition with Kraft. It's not often that a food company can actually manage to match in competition with these giants and Annie's was doing it. The sad thing was that Annie's was doing it and they got purchased. No great surprise. This isn't a story of just yet another company falling to a mega corporation. It's a story of a company that was able to compete still getting bought up....for $820 million in cash.

I find this concerning on a number of levels but mostly because any time anything seems to threaten a mega corp's market share, one of the mega corps snaps it up in order to maintain their market share. They no longer maintain their market share because their original products are so fantastic. They maintain it through mergers and acquisitions. Period.

Argh.

Darn, now I don't want to eat Annies anymore. I don't trust General Mills, they will use any loophole to save a penny. There is a lot of chemistry that is legally organic but it isn't really organic. They will probably stretch it to the max.

Oh well, even organic Mac and Cheese isn't really good for us anyway, it is a treat that we can occasionally consume.

This is happening with some craft beer makers as well. They are either selling their name and losing the title of "craft" due to not being independently owed anymore.

I felt a little bummed out too when Burt's Bees was bought by Clorox. I still think they sell some decent stuff. The core products haven't changed much, just an addition of new hip product lines with fancy names and less organic ingredients.

I still hope I can find my Annie's at Ocean State Job Lot. They carry some organic foods at good prices. I was so happy to see Annie's mac and cheese as well as Bob's Red Mill stuff. Mac and cheese comes after bacon you know...

originally posted by: rickymouse
Darn, now I don't want to eat Annies anymore. I don't trust General Mills, they will use any loophole to save a penny. There is a lot of chemistry that is legally organic but it isn't really organic. They will probably stretch it to the max.

Oh well, even organic Mac and Cheese isn't really good for us anyway, it is a treat that we can occasionally consume.

Well, I'll find it interesting to see what happens in a month or so at my local Whole Foods. Will Annie's go bye bye there? Might be yet another indicator but I'm pretty much of the same thought as you. If I wanted to eat a General Mills product, I would. God knows it'd probably save me money but I'm one of those weirdos that cares more about what I and my kids eat than whether or not we have the latest and greatest thing. As a biologist (and an accountant lol), I view that what we eat as an important and lasting contribution to basically what our bodies are comprised of. 30 pairs of shoes aren't going to extend my or my children's lives but eating right sure the heck will. So we place that value of good food very high in this house. Ironically, that's exactly what my cost accounting prof, who was a food company exec once upon a time, advised us all too: "Don't eat the cheap stuff--only the good stuff for you with real food, real ingredients in it."

I was concerned when Annie's was snapped up by Solera Capital a few years ago but that extra capital support didn't change their products and actually helped them expand their lines without compromise. Now under the General Mills' banner? Zero trust in that.

originally posted by: eisegesis
This is happening with some craft beer makers as well. They are either selling their name and losing the title of "craft" due to not being independently owed anymore.

I felt a little bummed out too when Burt's Bees was bought by Clorox. I still think they sell some decent stuff. The core products haven't changed much, just an addition of new hip product lines with fancy names and less organic ingredients.

I still hope I can find my Annie's at Ocean State Job Lot. They carry some organic foods at good prices. I was so happy to see Annie's mac and cheese as well as Bob's Red Mill stuff. Mac and cheese comes after bacon you know...

I missed the Burt's Bees acquisition. Clorox?! Well now I'm glad that they no longer carry my all time favorite lip balm in Raisin shade anymore. Clorox just doesn't have the right associations as being a product that you'd want to stick on your face, you know? Let alone one's mouth.

Bummer.

But did they get "bought up" or did they really just simply sell out.

originally posted by: kosmicjack
Bummer.

But did they get "bought up" or did they really just simply sell out.

Bought up, sell out...pretty much the same thing technically. I like how NY Times mentioned that it was for $820 million in cash. Now we know what a successfully competitive product line is going for these days...in cash no less.

If you have a Kitchen Aid mixer with the pasta attachment you can make your own macaroni from organic flour, and use natural cheese from grass fed, free range cows.

I bet it would taste far superior to any kind of mac n cheese from a box. I'm sure you could use a food dehydrator and then vacuum seal the noodles into packets for longer-term storage.

It'll take more time, but if you made huge batches it might be kind of a fun weekend project. I think there's a way you can even make your own powdered cheese mix without using scary chemicals.

I don't fault Annie's for selling out. $820 mil's quite a bit of cash. I still see this as somewhat of a success story. General Mills must've bought them out to retain market share.

If Annie's can do it ... so can anyone else.

You can make your own mac and cheese from scratch using your own organic ingredients for about half the cost of those boxes and have far less waste to be sent to the landfill. It's really very easy, I learned to do it when I was about 10 years old.
Like you, I prefer to spend my resources on good, clean food. I'm always a bit flummoxed when I hear people saying, "I'd like to eat good food but I can't afford it." when they are standing there with the newest latest e-gadget, paying $100+ per month in phone and cable bills. Just what they are spending on that stuff would buy a lot of healthy food.

a reply to: WhiteAlice

Well, the difference being one is voluntary...the other is forced due to cash flow issues.
$820 million is no fire sale.

Thanks for sharing. That's disappointing, as someone who enjoyed their products-I don't eat a lot of pasta but it's a better option if needed-. Guessing that General Mills will keep the Annie's name on the products but include their additives.

a reply to: MystikMushroom

Well, unfortunately I'm disabled and Annie's is our standby dinner fixing on my "bad" nights. We typically stuff it with smoked sausage or chicken, tomatoes, and cajun spicing to make it a little more rounded but yeah, it's my crash night dinner. Now if you're offering to come over and make us a wonderful homemade mac and cheese for dinner, we'd love it, lol.

originally posted by: WhiteAlice

originally posted by: kosmicjack
Bummer.

But did they get "bought up" or did they really just simply sell out.

Bought up, sell out...pretty much the same thing technically. I like how NY Times mentioned that it was for $820 million in cash. Now we know what a successfully competitive product line is going for these days...in cash no less.

It must have been worth it.

How does an all-stock or all-cash deal affect the equity of the buying company?

More often, one company indirectly purchases another company and allows the target company to call it a merger in order to maintain its reputation. When an acquisition occurs in this way, the purchasing company can acquire the target company by either using all-stock, all-cash, or a combination of both. When a larger company purchases a smaller company with all cash, there is no change to the equity portion of the parent company's balance sheet. The parent company has simply purchased a majority of the common shares outstanding.

a reply to: WhiteAlice

Ya....kind of the whole point of *boxed* mac&cheese. LoL! Homemade mac? LoL! Only on special occasions.

a reply to: WhiteAlice

Hehe!

I found this awesome crock pot recipe I might try...you can use all organic ingredients and have it started in the morning before work!

Slow Cooker Black Bean Soup

So glad I never bought it. Personally it's cheaper in the long run to make my own meals, generally in larger quantities to preserve for leftovers. For the sake of convenience, I understand why many would buy it.

Even if the ingredients are organic, a lot of veg products are loaded with salt and are processed in ways that make me wonder why I don't go back to meat.

This is like when Tom's of Maine was bought out by a bigger corporation. TPTB would never allow a truly organic, safe product to be released to the masses.

S + F

Crap!

I buy food by reading every label. Shopping takes a while.

Most would be surprised how often ingredients change in a product.

I really hope they let this product stay as it is.

a reply to: WhiteAlice

I'm sure no one put a gun to their head to sell. An $820M corp isn't a mom and pop operation either.

originally posted by: kosmicjack
a reply to: WhiteAlice

Well, the difference being one is voluntary...the other is forced due to cash flow issues.
$820 million is no fire sale.

They made a whole lot more than that. Solera actually snapped up a majority interest in Annie's back in 2002 with $23 million and pumped more into it to really take control (total $83 million in investment). In 2012, they took Annie's public and gained $721 million in market capitalization--that was about $538.4 million according to the NY Times just there.

The Buyout Brain behind Annie's IPO

Because I find this stuff rather interesting:

Solera Capital: investing.businessweek.com...
Molly Ashby, CEO of Solera Capital: investing.businessweek.com...

This is really what the venture firms do overall though. They find those companies that have a good product and are still relatively "cheap", back it, providing it with a whole lot of capital so it grows into something wonderfully profitable...to sell to a big fish (that looks remarkably like a whale).