General Mills buys US pet food maker
General Mills Inc agreed yesterday to buy Blue Buffalo Pet Products Inc for about $8 billion, adding the maker of natural dog and cat food to a portfolio that includes Haagen-Dazs ice cream and Cheerios cereal.
“The Minneapolis-based company plans to pay $40 a share for Blue
Buffalo, which sells ‘antioxidant-rich’ dog nutrition and walnut-based kitty litter,’’ the companies said in a statement.
The deal comes as global food giants snap up makers of natural and organic products, which are outpacing mainstream brands in growth.
“In pet f ood, as i n human food, consumers are seeking more natural and premium products,” General Mills chief executive officer Jeff Harmening said.
The Wilton, Connecticut-based pet food maker’s shares rose as much as 17% in premarket trading.
Over the past three years, Blue Buffalo has delivered compound annual net sales growth of 12%, the companies said, reaching $1.3 billion in the 2017 fiscal year.
General Mills is one of several consumer-product giants focusing on pet care, a $30 billion market in the United States alone.
Nestle SA of Switzerland has identified its Purina division as a pillar of growth as it divests slower-growing units like its US confectionery business. Cargill Inc in January agreed to buy Pro-Pet, the maker of Black Gold dog food.
General Mills said it would finance the deal with debt, cash on hand and about $1 billion in equity.
The price represents a 23% premium to Blue Buffalo’s 60-day volume-weighted average price.
The deal has been approved by both companies’ boards and is subject to regulatory approvals.