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Mike Mozart | Flickr


M&As Gobbling Up the Healthy Food Sector

Middle market natural food brand Annie’s gets scooped up by General Mills as the giant adds to its portfolio of healthy eats.

Back in 1989, Annie Withey had a simple idea – make a healthy and tasty boxed macaroni and cheese. She perfected the recipe and packed it into a purple carton illustrated with a picture of a rabbit (inspired by her pet) and her home phone number.

Twenty-five years and a full menu of products including salad dressings, cookies, crackers, and gummy snacks (rabbit shaped, naturally) later, Annie is still addressing her customers personally, but control of her homegrown efforts have changed hands. The middle market food company was just acquired by General Mills in a deal estimated at $46 per share in cash, or about $820 million. Annie’s reported $204 million in annual sales during its last fiscal year.

The acquisition comes two years after Annie’s filed for an IPO under the stock symbol BNNY. That move was orchestrated by another woman, Molly Ashby, founder and CEO of Solera Capital, a private equity firm that bought a controlling stake in the company in 2002 and helped it expand from its niche place in natural food co-ops to the shelves of national chain retailers such as Target and Costco. The IPO saw Solera’s investment in Annie’s soar from $81 million to $534 million.

Ashby, formerly of J.P Morgan, is no stranger to spotting lucrative trends, including a leveraged buyout of a hospital operator that led to nearly $1 billion in profits in the late 1980s. But Ashby was focused on brands with social impact when she started her own firm, recognizing that consumers were becoming more concerned with the impact of their purchases. In an interview with the Wall Street Journal, Ashby remarked that the rise of Annie’s stock, “symbolizes the broader market’s and institutional investors’ appreciation” of organic food as more than a fad,” and that “One of our points of view was this is going to make it into the mainstream.”

General Mills has quietly been taking advantage of this continuing trend and snapping up smaller midmarket (read: proven successful) natural food companies to fit under its “Small Planet Foods” portfolio which it launched in 2000. Among the acquisitions that now sit beside Cheerios and Wheaties: Cascadian Farms and Muir Glen, Larabar, and Food Should Taste Good chips. General Mills’ Small Planet Foods brought in $330 million in revenue last year –the size of an average midmarket company.

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