Mars, the maker of both M&M’s and cat food, announced on Wednesday that it was significantly expanding its pet food business by buying brands including Iams and Natura from Procter & Gamble for $2.9 billion in cash.
With the deal, which is expected to close this year, Mars will bring those brands together with its existing pet food products, which include Whiskas cat food and the Pedigree and Royal Canin dog food lines.
For Procter & Gamble, the sale represents another step toward streamlining the company, a cause championed by the activist investor William A. Ackman, who took a stake in the company in 2012.
Last year, Mr Ackman pressed for the ouster of the chief executive, Bob McDonald, who was ultimately replaced by A.G. Lafley, Mr. McDonald’s predecessor.
“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,†Mr. Lafley said in a statement. “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.â€
Mars, one of the largest private companies in the country, has net sales of $33 billion annually, and makes a range of consumer goods, including popular chocolates like Snickers and Twix and chewing gums like Extra and Orbit.
Procter & Gamble said that as a result of the sale, it would restate its most recent quarterly earnings. Its earnings per share guidance for the year was unchanged, however. Proceeds from the sale will be used for general corporate purposes, the company said.
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