General Mills to buy pet food maker Blue Buffalo for $8
billion
Send a link to a friend
[February 23, 2018]
(Reuters) - Cheerios cereal
maker General Mills Inc <GIS.N> will buy Blue Buffalo Pet Products Inc <BUFF.O>
for nearly $8 billion, seeking to tap burgeoning demand for natural pet
food and offset falling sales for processed items.
The acquisition announced Friday is the latest by a major food company
seeking to expand in faster growing areas such as pet- and organic-food
amid falling demand for established brands.
General Mills will pay $40 per Blue Buffalo share, representing a
premium of 17.2 percent to the pet food company's Thursday closing
price. Blue Buffalo shares were trading higher at $40.15 before the
bell.

Nestle <NESN.S>, Mars and Cargill have all made bets on the pet care
industries. Mars, the world's biggest pet food maker, bought animal
healthcare provider VCA for $7.7 billion last year.
While U.S. retail pet food sales rose 3.7 percent last year, overall
packaged food sales climbed 1.2 percent, according to research firm
Euromonitor.
Blue Buffalo, founded in 2002, rakes in more than $1 billion in yearly
sales, benefiting from strong demand for its BLUE brand of dog and cat
food made with whole meats, fruits and vegetables.
Minneapolis-based General Mills, home to Yoplait yogurt, Nature Valley
snack bars and Chex cereal, has seen a dent in sales over the past two
years as consumers ditch processed food and favor items viewed as
healthier.
The company expects Blue Buffalo will help boost sales and profit
margins and add to General Mills' earnings within two years.
[to top of second column] |

The Blue Buffalo logo. REUTERS/Handout

"In pet food, as in human food, consumers are seeking more natural and premium
products and we have tremendous respect for how attentive Blue Buffalo has been
to the needs of their consumers," General Mills Chief Executive Officer Jeff
Harmening said in a statement.
General Mills said the deal would make it the leader in the U.S. wholesome
natural pet food industry, the fastest growing category in the pet food market.
Goldman Sachs was General Mills' financial adviser, while JPMorgan and
Centerview Partners advised Blue Buffalo.
Cleary Gottlieb Steen & Hamilton LLP provided legal counsel to General Mills.
Simpson Thacher & Bartlett LLP advised Blue Buffalo.
(Reporting by Aishwarya Venugopal and Nivedita Balu in Bengaluru and Martinne
Geller in London; Editing by Sai Sachin Ravikumar)
[© 2018 Thomson Reuters. All rights
reserved.] Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
 |