Iams, Eukanuba and Natura Pet Products will pass from one conglomerate to another in a $2.9 billion transaction that expands Mars Inc.'s pet business and guts Procter & Gamble's. The all-cash deal, announced today, adds mass-market pet food brands Iams and Eukanuba to a Mars collection that includes Royal Canin, Pedigree, Whiskas, Nutro and the Banfield pet hospital chain. The sale is expected to close later this year. "We view the addition of the Iams, Eukanuba and Natura brands as exceptionally strategic," said Todd Lachman, president of Mars Petcare Global in McLean, Va. "The deal reinforces our leadership in pet nutrition and veterinary science, attracts world-class talent and grows our world-leading portfolio." The sale extends only to North America, Latin America and other selected countries. Cincinnati-based Procter & Gamble Co. confirmed that it is looking to sell its European pet food business separately. The transaction's completion will allow P&G to dedicate resources to and focus on dozens of its leading household brands, such as Tide detergent, Gillette grooming products and Duracell batteries. "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," President and CEO A.G. Lafley said. "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." P&G expanded its holistic and natural pet food footprint in 2010 when the company bought Natura?s Innova, Evo, California Natural, Healthwise, Mother Nature and Karma brands. (Karma has since been discontinued.) The purchase price was not announced, but analysts pegged it at $450 million to $500 million. Eleven years earlier, in 1999, P&G paid $2.05 billion for Iams and Eukanuba, purchasing the global brands from privately held Iams Co. P&G noted that its pet brands captured about 5 percent of the North American market in 2013 but that sales were hurt by a salmonella scare that forced the recall of many Natura dry pet foods and treats. Spending in the U.S. pet food market is at an all-time high. The category is expected to generate $22.6 billion in sales this year, up $1 billion, the American Pet Products Association reported in March.
