General Mills to buy pet food maker Blue Buffalo for $8 billion

(Reuters) - Cheerios cereal maker General Mills Inc <GIS.N> will buy Blue Buffalo Pet Products Inc <BUFF.O> for nearly $8 billion, seeking to tap burgeoning demand for natural pet food and offset falling sales for processed items.

The acquisition announced Friday 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.

The best and worst cereals for you:

22 PHOTOS
The best and worst cereals for you
See Gallery
The best and worst cereals for you

BEST: Cheerios 

Nutrition (1 cup): 111 calories, 1.77 g fat (0.36 g saturated), 213 mg sodium, 22 g carbs, 3.6 g fiber, 1.1 g sugars, 3.5 g protein.

WORST: Cinnamon Toast Crunch

Nutrition (1 cup): 170 calories, 4 g fat (0.5 g saturated), 240 mg sodium, 33 g carbs, 2.5 g fiber, 12 g sugars, 1.5 g protein

(AOL)

BEST: Kix

Nutrition (1 cup): 110 calories, 1 g fat (0 g saturated), 180 mg sodium, 25 g carbs, 3 g fiber, 3 g sugars, 2 g protein.

(General Mills)

WORST: Apple Jacks

Nutrition (1 cup): 110 calories, 1 g fat (0.5 g saturated), 135 mg sodium, 25 g carbs, <1 g fiber, 12 g sugars, 1 g protein.

(AOL)

BEST: Kashi Go Lean Crunch

Nutrition (1 cup): 190 calories, 3 g fat (0 g saturated), 100 mg sodium, 38 g carbs, 8 g fiber, 13 g sugars, 9 g protein.

(Kashi)

WORST: Trix

Nutrition (1 cup): 130 calories, 1.5 g fat (0 g saturated), 160 mg sodium, 27 g carbs, 1 g fiber, 10 g sugars, 1 g protein.

(Getty)

BEST: Grape Nuts

Nutrition (1 cup): 210 calories, 1 g fat (0 g saturated), 270 mg sodium, 45 g carbs, 7 g fiber, 5 g sugars, 8 g protein.

(Post Consumer Brands)

WORST: Honey Smacks

Nutrition (1 cup): 133 calories, 0.5 g fat (0 g saturated), 53 mg sodium, 32 g carbs, 1.5 g fiber, 20 g sugars, 2.7 g protein.

(AOL)

BEST: Mini Wheats

Nutrition (1 cup): 190 calories, 1 g fat (0 g saturated), 0 mg sodium, 46 g carbs, 6 g fiber, 11 g sugars, 5 g protein.

(Kellogg's)

WORST: Lucky Charms

Nutrition (1 cup): 147 calories, 1.5 g fat (0 g saturated), 227 mg sodium, 29 g carbs, 2.7 g fiber, 13 g sugars, 2.7 g protein.

BEST: Cascadian Farm Organic Fruitful O's

Nutrition (3/4 cup): 100 calories, 1 g fat (0 g saturated), 130 mg sodium, 23 g carbs, 3 g fiber, 8 g sugars, 2 g protein.

(Cascadian Farm)

WORST: Corn Pops

Nutrition (1 cup): 120 calories, 0 g fat (0 g saturated), 105 mg sodium, 27 g carbs, 3 g fiber, 9 g sugars, 1 g protein.

(AOL)

BEST: Fiber One

Nutrition (1 cup): 120 calories, 2 g fat (0 g saturated), 220 mg sodium, 50 g carbs, 28 g fiber, 0 g sugars, 4 g protein.

(General Mills)

WORST: Golden Grahams

Nutrition (1 cup): 160 calories, 1.5 g fat (0 g saturated), 320 mg sodium, 36 g carbs, 2 g fiber, 13 g sugars, 2 g protein.

(AOL)

BEST: Special K Red Berries

Nutrition (1 cup): 110 calories, 0 g fat (0 g saturated), 190 mg sodium, 27 g carbs, 3 g fiber, 9 g sugars, 2 g protein.

WORST: Froot Loops

Nutrition (1 cup): 110 calories, 1 g fat (0.5 g saturated), 135 mg sodium, 25 g carbs, <1 g fiber, 12 g sugars, 1 g protein (per 1 cup).

(AOL)

BEST: Nature's Path Organic Millet Rice

Nutrition (1 cup): 120 calories, 2 g fat (0 g saturated), 115 mg sodium, 22 g carbs, 3 g fiber, 4 g sugars, 4 g protein.

WORST: Cookie Crisp

Nutrition (1 cup): 117 calories, 0.9 g fat (0.18 g saturated), 178 mg sodium, 26.4 g carbs, <1 g fiber, 12.6 g sugars, 1 g protein.

(Getty)

BEST: Kashi Honey Puffs

Nutrition (1 cup): 120 calories, 1 g fat (0 g saturated), 0 mg sodium, 25 g carbs, 2 g fiber, 6 g sugars, 3 g protein.

(Kashi)

WORST: Cocoa Pebbles

Nutrition (1 cup): 160 calories, 1 g fat (1 g saturated), 227 mg sodium, 33 g carbs, <1 g fiber, 13 g sugars, 1 g protein (per 1 cup).

(AOL)

BEST: Barbara's Puffins Original Cereal

Nutrition (3/4 cup): 90 calories, 1 g fat (0 g saturated), 190 mg sodium, 23 g carbs, 5 g fiber, 5 g sugars, 2 g protein.

(Barbara's)

WORST: Cap'n Crunch

Nutrition (1 cup): 144 calories, 2.09 g fat (0.54 g saturated), 270 mg sodium, 31 g carbs, 0.9 g fiber, 15.69 g sugars, 1.57 g protein.

(AOL)

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

General Mills will pay $40 per Blue Buffalo share, representing a premium of 17.2 percent to the pet food company's Thursday closing price. Blue Buffalo shares were trading higher at $40.15 before the bell.

Nestle <NESN.S>, 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 last year.

While U.S. retail pet food sales rose 3.7 percent last year, overall packaged food sales climbed 1.2 percent, according to research firm Euromonitor.

Blue Buffalo, founded in 2002, rakes in more than $1 billion in yearly sales, benefiting from strong demand for its BLUE brand of dog and cat food made with whole meats, fruits and vegetables.

Minneapolis-based General Mills, home to Yoplait yogurt, Nature Valley snack bars and Chex cereal, has seen a dent in sales over the past two years as consumers ditch processed food and favor items viewed as healthier.

The company expects Blue Buffalo will help boost sales and profit margins and add to General Mills' earnings within two years.

"In pet food, as in human food, consumers are seeking more natural and premium products and we have tremendous respect for how attentive Blue Buffalo has been to the needs of their consumers," General Mills Chief Executive Officer Jeff Harmening said in a statement.

General Mills said the deal would make it the leader in the U.S. wholesome natural pet food industry, the fastest growing category in the pet food market.

Goldman Sachs was General Mills' financial adviser, while JPMorgan and Centerview Partners advised Blue Buffalo.

Cleary Gottlieb Steen & Hamilton LLP provided legal counsel to General Mills. Simpson Thacher & Bartlett LLP advised Blue Buffalo.

(Reporting by Aishwarya Venugopal and Nivedita Balu in Bengaluru and Martinne Geller in London; Editing by Sai Sachin Ravikumar)

 

Read Full Story