General Mills announced Monday that it's looking to bulk up on organic snacks.
It's buying natural food company Annie's Homegrown for $820 million.
The news boosted Annie' (BNNY)s stock 37% higher in after-hours trading. General Mills (GIS) shares were flat.
General Mills said Annie's can help the conglomerate's "snacks" and "convenient meals" categories.
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Snacks were the only U.S. retail category where General Mills saw any growth in its most recent fiscal year besides Small Planet Foods, a separate organic foods company it bought in 2000. U.S. retail sales account for three quarters of General Mills' profits.
Annie's, which got its start a quarter century ago selling macaroni and cheese dinners in New England, has since expanded to snacks, dressings and frozen foods. The company went public two years ago after a decade under private equity control.
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Known for its bright packaging and bunny insignia, the company had $204 million in sales in 2014, a 20% bump from a year earlier. Profits rose even faster.
General Mills said in a statement that Annie's will join a host of other companies in its organic food portfolio, which includes Cascadian Farm, Muir Glen and Food Should Taste Good.
