Mars Inc. has reached a deal to acquire some Procter & Gamble pet food businesses for $2.9 billion, solidifying the industry dominance of the manufacturer of M&M candies and Uncle Ben’s rice.
The firms said that they’ll complete the deal in the second part of 2014. The agreement leaves out some brands, mainly in European markets.
According to Bloomberg, Mars already operates brands such as Pedigree, Royal Canin and Whiskas and the new deal sees it add lams, Eukanuba and Natura to its product lines. The McLean, Virginia-based business led global pet-food sales in 2012, commanding 23.4% of the market, in comparison with 23.1$ for Nestle SA, proprietor of Purina.
“It gives them size in a potentially attractive market. They just have to decide to invest back in the business,” said Ali Dibadj of Sanford C. Bernstein & Co.
P&G said it will state again its financial results to cut its fiscal 2013 per-share earnings by 3 cents and reduce 2014 earnings by 4 cents. The company added that the deal will have no bearing on profit growth estimate for fiscal 2014 and won’t have a substantial effect on fiscal results for 2015. Cash generated from the sale will be utilized towards general corporate ends, the firm said.
Stocks of the Cincinnati-based P&G hit $81.65 as of 11:35 am in New York, after gaining 0.4%. The shares remained unchanged in 2014 through yesterday.
P&G took back A.G Lafley as its chief executive officer last year and the new boss has been trying to reduce operational costs by assessing the company’s businesses for possible divestures. The firm acquired lams in 1999, a unit that analysts and investors see a possible candidate for divesture following its poor performance.
As Reuters reports, Mars, which is controlled by the Mars family, had yearly sales of more than $33 billion in 2013.
To contact the reporter of the story: Yashu Gola at email@example.com