General Mills buying mac and cheese maker Annie's

AP News
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Posted: Sep 08, 2014 6:00 PM

NEW YORK (AP) — Packaged food giant General Mills plans to buy Annie's, the maker of rabbit-shaped mac and cheese, for $820 million, adding more natural and organic packaged offerings as consumers' tastes change.

General Mills Inc., the company behind classic food brands such as Pillsbury dough, Progresso soups, Yoplait yogurts and Cheerios and Cinnamon Toast Crunch cereal, has been trying to cut cost and has tweaked its recipes as sales stagnate.

Sales have suffered as Greek yogurt and breakfast sandwiches became popular options for the morning meal. General Mills was slow to realize the growing demand for Greek yogurt, which has more protein than regular yogurt, but it has been adding some other options that it hopes consumers will consider healthier. Those include new Fiber One cookies with 5 grams of fiber and 120 calories.

Annie's sales, on the other hand, grew 20 percent in its latest fiscal year. General Mills said Monday that Annie's "convenient meals" and snacks businesses were particularly attractive. Annie's also makes other pastas, frozen pizzas, and snacks like crackers and fruit snacks.

The Minneapolis-based company is paying $46 per share for Annie's Inc., which is based in Berkeley, California.

Annie's board endorsed the offer, which is expected to close later this year. The company went public in March 2012 at $19 per share.

Annie's stock jumped 37 percent in aftermarket trading to $45.97. Its shares have dropped 25 percent over the past 12 months. It has dealt with rising costs for organic wheat and noted "material weaknesses" in its financial reporting. Its auditor, PricewaterhouseCoopers, said in June that it would resign.

General Mills stock rose 99 cents, or 1.9 percent, to $54.50 in after-hours trading. Its shares have gained 8.8 percent in the last 12 months.