Nestlé offers to sell off European pet food interests

Nestlé chairman, Rainer Gut (left), shaking hands with Ralston Purina chief executive, Patrick McGinness (right), when the deal was first signed back in January Keystone

The world's biggest food group, Swiss-based Nestlé, has proposed selling off pet food brands in Spain, Greece and Italy to win European Commission approval for its proposed $10.3 billion (SFr18.3 billion) purchase of United States group, Ralston Purina.

The Commission recently extended its review of the Swiss firm’s proposed purchase of the US pet food maker. It is due to rule on the deal by July 30.

The Commission is concerned that Nestlé’s purchase of Purina would harm competition in the pet food market. Nestlé proposed divesting some businesses in order to meet those concerns.

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 deal 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