Pet Food Consolidation, Conglomerates, Private Equity, Anti-Trust Fines
The nation’s pet-food sales have nearly doubled since 2000, to more than $22 billion last year, American Pet Products Association data show. And the bestsellers for dogs and cats are the pricey “premium” lines, which attracted a record-breaking $10 billion in sales last year.
That bounty has led to “rampant consolidation pressures” over the past half decade, Euromonitor International industry researchers said, as well as a series of big buyouts and megamergers under a shrinking number of conglomerate owners.
Del Monte Foods on Feb. 18 closed the sale of all its food businesses – and its name – to unaffiliated company Del Monte Pacific Ltd. On the following day, legacy Del Monte renamed itself Big Heart Pet Brands, claiming to be “the largest standalone pet food and snacks company in North America.”
J. M. Smucker Co. on Feb. 3 unveiled an agreement to acquire Big Heart Pet Brands – the former Del Monte unit that includes Gravy Train and Meow Mix – in a cash and stock transaction valued at approximately $5.8 billion. Big Heart has sales of $2.3 billion.
KKR’s Del Monte Buyout Ends Well After Sale The KKR-led 2011 buyout of Del Monte got off to a bumpy start. Allegations of conflicts of interest involving Del Monte’s bankers at Barclays led to a judicial tongue-lashing that cost the company’s new owners $66M in payments to shareholders and set a legal precedent that has stuck with dealmakers ever since. But it’s ending up a winner. The private-equity group is selling Del Monte’s pet food brands, now called Big Heart, to JM Smucker for $5.8B. Following the $1.7B sale of Del Monte’s canned-food business in 2013, KKR and its partners, Vestar and Centerview, have recouped the $1.7B in equity they put into the original deal, and then some.
The deal will mean yet another new owner for Big Heart this decade. The company, then known as Del Monte Foods, was acquired more than four years ago by a group that included the investment firms Kohlberg Kravis Roberts, Vestar Capital Partners and Centerview Capital for $5.3 billion.
Mr. Lafley set about addressing Mr. Ackman’s criticisms on Wednesday, agreeing to sell most of Procter & Gamble’s pet foods brands — including Iams and Eukanuba — to Mars, best known as a candy maker, for $2.9 billion in cash.
Del Monte Corp. said Thursday it will acquire Natural Balance Pet Foods Inc., expanding its long list of pet brands and wading into M&A waters for the first time since a heavily litigated $5.3 billion buyout by KKR & Co. LP in 2011.
Natural Balance will join Del Monte’s dog and cat food line, which already includes Milk-Bone, Kibbles ‘n Bits and Meow Mix. The company, best known for its canned fruits and vegetables, has amassed one of the biggest collections of independent pet brands in the country, with total sales last year of $1.8 billion last year, roughly half the company’s total.
The Procter & Gamble Company (NYSE: PG) has signed an agreement to acquire Natura Pet Products, Inc., a privately-held pet food business based in Davis, California.
This move enables P&G to expand into the attractive “holistic and naturals” segment of the pet food category, complementing P&G’s current Iams and Eukanuba brands and helping the Company advance its overall growth strategy of “reaching more consumers in more parts of the world more completely.”
Natura’s brands include Innova, Evo, California Natural, Healthwise, Mother Nature and Karma. These brands are sold in a limited number of pet specialty stores and through veterinarians, mainly in the United States and Canada.
Buyout firms KKR & Co LP (KKR.N) and Clayton, Dubilier & Rice LLC (CD&R) have teamed up to take PetSmart Inc (PETM.O) private for more than $7.5 billion, people familiar with the matter said on Tuesday, as the auction for the pet food retailer heats up.
Petfood manufacturers Nestlé SA, Mars Inc. and Colgate-Palmolive Co. were fined a collective €35.3 million (US$46.7 million) by France’s antitrust authority for pressuring petfood distributors to mark up prices, the Wall Street Journal reported.
France’s antitrust authority fined Nestlé SA, Mars Inc. and Colgate-Palmolive Co. €35.3 million ($46.7 million) for pressuring their distributors to keep prices high for pet food, the latest in a string of rulings to crack down on alleged price fixing across large swaths of the French economy.