Comprehensive M&A data with integrated detailed company information
Nestlé to become Champion in pet foods: WSJ
Posted on Thursday, 05 July 2018 13:42
Confectionary giant Nestlé is discussing a potential acquisition of Canada-based Champion Petfoods as it looks to expand away from its packaged foods operations, the Wall Street Journal reported.
The paper cited people with knowledge of the situation as saying a deal could be worth around USD 2.00 billion and would likely involve the consumer goods company taking a majority stake in the dog and cat food specialist.
If a transaction goes ahead, it would include Champion’s unbuilt 400,000 square food production plant, which was announced in 2017 and is expected to cost some USD 200.00 million to build.
The site would allow Nestlé to expand its operations within the pet food industry and its presence in Canada, enhancing its already existing activities in the market through its Purina brand.
Champion, owned by Toronto-based private equity firm Bedford Capital, sells its cat and dog foods under the Orijen and Acana monikers, with fresh meat, poultry and fish among the ingredients used to create each product.
The company has operations in some 80 countries, with both a brick and mortar and online presence.
Nestlé is considered to be one of the world’s largest food companies, with more than USD 90.00 billion in annual revenue.
Last year, its Purina pet food business accounted for roughly USD 11.20 billion of this amount and recorded a sales growth of 3.0 per cent, placing it second for the company’s most expanded segment behind coffee.
Sources close to the situation cautioned that talks to acquire Champion could still fall at the last hurdle.
However, Nestlé’s interest comes at a pivotal time as US activist investor Daniel Loeb issued a public letter to chief executive Mark Schneider earlier this week, criticising the group for not selling underperforming assets quickly enough and having a muddled strategic approach to its business plan.
The firm has been investing in markets such as pet care, bottle water and coffee following pressure from Loeb; although it is worth noting that many businesses once prized for their confectionary operations, have been expanding into other areas as consumers become more health conscious in recent years.
Pet food and care has been a popular target among large businesses for a while, with the largest announced deal in the entire food and beverage market this year being General Mills buying Blue Buffalo Pet Products for USD 8.00 billion, according to Zephyr, the M&A database published by Bureau van Dijk.
Additionally, Mars has picked up veterinary operator AniCura Holding for around EUR 2.00 billion.
© Zephus Ltd