General Mills Inc., GIS 0.86% best known for Cheerios breakfast cereal and Yoplait yogurt, is paying $8 billion to get back into pet food.
The Minneapolis-based food giant, which has only sold human food for many years, said Friday it plans to buy Blue Buffalo Pet Products Inc. BUFF -1.95% as it looks for a piece of the fast-growing natural pet food market.
Under terms of the agreement, General Mills would pay $40 a share for Blue Buffalo, a 17.2% premium over its Thursday closing price of $34.12.
Shares in Blue Buffalo jumped 17.4% premarket Friday.
Blue Buffalo makes natural cat and dog food and treats under the “Blue” label, and in its last fiscal year had $1.3 billion in net sales.
General Mills CEO Jeff Harmening said in prepared remarks that consumers are looking for more natural products for their pets as they are for themselves. The natural pet food market is the fastest-growing piece of the $30 billion U.S. pet food market and accounts for about 10% of market in volume but about 20% of the value, General Mills said.
Source: Yahoo News
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