Nestlé reportedly ready to pay $10 billion for US pet food group

swissinfo.ch

The Swiss-based food giant, Nestlé, is reportedly on the verge of taking over the United States pet-food company, Ralston Purina, in a deal worth $10 billion (SFr16.3 billion).

The Wall Street Journal said on Monday that a deal could be announced within days. Neither company would comment on the report, which quoted unnamed sources close to the companies.

It is believed that Nestlé is offering nearly $33 for each Ralston share – roughly 34 per cent more than the St Louis-based company’s closing stock price on Friday of $24.63.

The acquisition would give Nestlé a commanding presence in the US pet-food market, with both firms holding some of the best-known brands in the pet food business.

But a deal could raise anti-trust questions, forcing Nestlé to divest itself of some brands to win US regulatory approval.

The Wall Street Journal says Ralston currently 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.

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.

Nestlé’s per-food brands include “Friskies” and “Alpo”. Ralston’s top brand is “Purina Dog Chow”.

swissinfo