THE DEAL (New York) -- Mars, the purveyor of Snickers and M&M's, expanded its pet food business on Wednesday with a deal to acquire Procter & Gamble's (PG) pet food brands Iams, Eukanuba and Natura for $2.9 billion in cash.
The deal includes most, but not all, of Procter & Gamble's pet care business. Assets representing about 80% of Procter & Gamble's global pet care sales will change hands in the deal, including operations in North America, Latin America and other countries. Markets including the European Union are not part of the sale. The consumer giant said it plans to sell its pet-related assets in those markets separately.
Mars has an option to acquire pet-related businesses in several additional countries. The Cincinnati-based company said net proceeds from the transaction would be used for general corporate purposes.
The transaction is expected to be completed in the second-half of 2014, pending regulatory approval.
For Procter & Gamble, the deal continues an internal strategy to focus on personal care and home care, while shedding non-core and food-related assets. The company sold its Pringles chips business to Kellogg (K) for about $2.7 billion in February 2012. A decade earlier, in 2001, Procter & Gamble sold the Jif and Crisco brands to J.M. Smucker (SJM) for about $806 million. A source said Procter & Gamble would continue that internal focus.
"Exiting pet care is an important step in our strategy to focus P&G's portfolio on the core businesses where we can create the most value for consumers and shareowners. The transaction creates value for P&G shareowners, and we are confident that the business will thrive at Mars, a leading company in pet care," said P&G's chief executive A.G. Lafley in a statement.