General Mills said Friday it’s buying a line of pet treats from Tyson Foods for $1.2 billion.
The portfolio includes brands like Nudges, Top Chews and True Chews. It’s the latest pet food acquisition for the Golden Valley-based food maker, which re-entered the market for the first time in 50 years in 2018 when it purchased Blue Buffalo Pet Products Co. for $8 billion.
Since then, the pet segment has been a reliable growth business for General Mills compared to some of its more staid packaged food categories.
“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 pet segment at General Mills, said in a statement. “By adding these trusted pet treat products to our portfolio, we are strengthening our position in this attractive category.”
The pandemic was an unexpected boon for General Mills in people foods. Its retail sales skyrocketed last year as consumers hunkered down at home, turning to baking, comfort and convenience in food.
The company — known for foods like Cheerios, Betty Crocker cake mixes and Old El Paso products — was able to pay down debt much quicker than forecast.
The Tyson deal, paid for with cash on hand and some short-term borrowing, provides General Mills with an estimated tax benefit of $225 million, making the effective purchase price $975 million.
Tyson Foods’ pet snacks businessgenerated more than $240 million in sales during the 12 months ended April 3.
“Today’s announcement reinforces our commitment to using all capital allocation levers – including investment in the business, dividend growth, strategic acquisitions, and share repurchases – to drive top-tier shareholder returns over the long term,” Jeff Harmening, chief executive officer at General Mills, said in a statement.
The company’s stock rose 1% in early trading Friday.