Cheerios Maker General Mills Makes $1.2 Billion Bet on Pets

(Bloomberg) -- Cereal giant General Mills Inc. continued its push into what it calls the “humanization of pets” with a $1.2 billion deal to buy a division from Tyson Foods Inc. that sells treats under brands like Nudges and Top Chews.

The division, started in 2011, tallied more than $240 million in revenue over the past 12 months through April 3, Tyson said Friday in a statement. That represented less than 1% of Tyson’s $43.2 billion in annual sales. The deal is expected to be completed by the end of its fiscal year in September.

Read deal snapshot here

For General Mills, the maker of Cheerios cereal and Progresso soup, the acquisition comes after an $8 billion purchase of Blue Buffalo pet food brand in 2018 that got it started in the category. Its pet food division grew 12% last quarter to $436 million, topping overall growth. The unit accounts for about 10% of total revenue.

“Pet food is a high-growth category, fueled by the humanization of pets, a trend that has only increased during the pandemic,” Bethany Quam, president of the General Mills pet segment, said in a separate statement.

The acquisition will be funded by cash and includes an estimated tax benefit of $225 million, General Mills said.

Shares of both companies were little changed at 9:37 a.m. in New York.

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