General Mills Buys Blue Buffalo for $8B
CBJ — General Mills is acquiring Blue Buffalo Pet Products for $8 billion U.S.
The move is an attempt by General Mills to tap into the growing demand for natural pet food and offset falling sales for processed items.
The acquisition 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 USD per Blue Buffalo share, putting the sale price at just less than $8 billion USD.
Nestle, 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 USD last year.
Blue Buffalo, founded in 2002, had more than $1 billion USD in sales last year.
Minneapolis-based General Mills, known for such popular brand products as Cheerios breakfast cereal, Yoplait yogurt, Nature Valley snack bars and Chex cereal, has seen a drop in sales over the past two years as consumers curb the amount of processed food they eat in favour of more healthier options. The main knock against most breakfast cereals is the amount of sugar they contain.
The company expects Blue Buffalo will help boost sales and profit margins and add to General Mills’ earnings within two years.