Nestlé dumps Alley Cat to secure better pedigree

Bags of Nestlé and Purina pet food sit side-by-side Keystone

Nestlé has welcomed a unanimous decision by the United States Federal Trade Commission to approve its $10.1 billion (SFr16.7 billion) purchase of Ralston Purina.

The Commission said the two companies had agreed to sell their “Meow Mix” and “Alley Cat” dry cat food brands to secure approval for the deal. The brands will be sold to Hartz Mountain, a unit of investment firm J W Childs Associates.

Nestlé spokesman, Francois Perroud, declined to comment on the terms of the divestiture terms.

“We realise there were limitations to what one can do in a given environment. We are fully willing to take these into account,” Perroud said.

The combined sales of the two businesses will create a global leader in the pet food industry. Nestlé, which has its headquarters in canton Vaud, already has global pet food sales of about $3.7 billion. Ralston Purina’s global Purina brand accounted for $2.7 billion in sales in 2000.

Nestlé, which is also the world’s biggest food group, had total sales in 2000 of SFr81.42 billion.

In a statement, Nestlé said it was confident the deal would lead to cost savings of $260 million a year by the end of 2003.

It said the two groups would be tied together under the command of John Harris, head of Nestlé’s US pet care business, who will head what it called the “integration team”.

The North American business will be run by Patrick McGinnis, now chief executive of Ralston Purina.

“We are looking forward now to integrating the two businesses. The teams are in place, and we are very optimistic about the growing importance in this profitable, very competitive and growing market,” said Perroud.

The deal went through although critics had worried that Nestlé could gain a dominant position in the US food industry.

The Chairman of the US Senate Judiciary Committee Patrick Leahy had said earlier this month that he wanted regulators to ensure that the deal would not hurt farmers and consumers.

“This is a growing market. This is a market where competition will help the market grow,” added Perroud.

swissinfo with agencies