Tuesday, January 16, 2001
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Posted on: Tuesday, January 16, 2001

Nestle to pay $10 billion for Ralston Purina

USA Today

The fight to feed Fido will take an international leap today when Swiss consumer giant Nestle is expected to announce it is buying dog chow maker Ralston Purina for $10.1 billion in cash, people familiar with the matter say.

The boards of both companies met separately and approved the deal yesterday. It would result in Nestle — which owns the Friskies, Mighty Dog and Alpo brands — passing privately held Mars as the nation’s biggest pet-food maker. Mars still rules globally.

Behind the deal: Pet-food sales are growing faster than sales of most human foods. By one estimate, the nation’s pet-food market is expanding at a rate of 6.5 percent a year.

Pets are big. There are about 58.5 million dogs and 72.6 million cats in the United States. And those numbers are projected each to grow about 2 percent in the next year, reports the Pet Food Institute.

"People tend to feed their pets better than they feed themselves," said Nancy Cook, vice president at the Washington trade group.

The deal is likely to face close scrutiny from antitrust regulators in Washington and Brussels, however, as the combined businesses would control a large share of pet-food sales in the United States and Europe.

Nestle has a lock on more than 18 percent of the $7 billion U.S. dog and cat-food market. Ralston has nearly 27 percent of the business.

Regulators may demand that the companies sell some brands as the price for the deal. But people close to the negotiations said Ralston’s strength is mostly in dry pet foods, while Nestle has a stronger position in canned foods.

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