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Tuesday, September 9, 2014

General Mills (GIS) buys Annie's (BNNY) to jump-start organic growth

General Mills, the maker of Cheerios and Bisquick, is buying Annie’s for $820 million to gain a popular brand of natural and organic foods.

Annie’s stock soared 37.33 percent in early trading today.

General Mills offer translates into $46 a share in cash. At the time of offer yesterday, the price represented a 37 percent premium over the closing price.

Annie’s was down 22 percent this year before news of the deal yesterday, as lower profits and rising ingredient costs spooked investors. This deal will allow synergies with General Mills’ organic product division, which includes brands such as Larabar energy bars. General Mills said in a statement that the deal should start boosting profits within the first year.

Other health food stocks, such as WhiteWave Foods Co. and Hain Celestial Group Inc., rode higher on the deal news and speculation arose that more M&A activity might happen in the sector.

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