EC approves Nestlé acquisition of Ralston

Nestlé chairman Rainer Gut (left) shakes hands with Patrick McGinnis (right), chief executive of Ralston Purina, when the deal was first announced on January 16 in St Louis, United States Keystone

The European Commission has approved Swiss food giant Nestlé's purchase of United States-based pet food company Ralston Purina for $10.3 billion (SFr17.75 billion), with conditions.

“The Commission gives conditional clearance to the acquisition,” it said in a statement.

Nestlé, the world’s biggest food group, agreed to conditions in Italy, Spain and Greece, including the licensing of several pet food brands.

The deal cannot yet be closed, however, because it has yet to be approved by the US Federal Trade Commission. No date has been set for that decision.

Earlier this month, month Nestlé proposed selling off its pet food brands in Spain, Greece and Italy to win EC approval of the deal.

The Commission was concerned that Nestlé’s purchase of Purina would harm competition in the pet food market.

The deal, first announced in January, would make Nestlé one of the world’s largest pet food producers.

Analysts said at the time that a merger of the two giants could raise anti-trust questions, forcing Nestlé to divest itself of some brands to win regulatory approval.

Ralston holds a 27 per cent share of the US’s $4.3 billion dog-food market, compared to Nestlé’s 12 per cent share.

The two firms together account for 46 per cent of the cat-food market, with Ralston commanding 33 per cent.

Nestlé has been making pet food since 1985, when it acquired Carnation, which brought it the “Friskies” line of products.

It then bought Alpo in 1994, Spillers in 1998 and Cargill Argentina in August 2000 to create a pet-care business with SFr6 billion in sales.

Ralston Purina had North American sales of more than SFr3.67 billion last year and international sales of around SFr735 million.

Analysts say Nestlé is keen to expand in the pet-food market, as it is one of the strongest growing segments in the food industry. Sales in the US grew by nearly five per cent last year.

swissinfo with agencies