Tyson Foods Inc. of Springdale said Friday that it is selling pet treats business to General Mills Inc. for about $1.2 billion.
The deal is expected to be completed by the end of the company’s fiscal year and is subject to regulatory approval.
Tyson’s treats business includes the Nudges, True Chews and Top Chews brands, along with a production facility in Independence, Iowa. It has 300 employees, and those workers will join General Mills.
“We’re proud of the tremendous success of this business and the diligent work by our team to meet growing demand for high quality pet treats,” Noelle O’Mara, group president of Prepared Foods for Tyson Foods, said in a news release. “We believe the time is right to transition these great brands to an established pet foods business where they will complement their existing portfolio.”
Tyson said pet treat sales totaled more than $240 million in the 12 months ended April 3. It said market fundamentals “are currently strong in the $35 billion pet food industry, which has witnessed an increase in pet ownership during the pandemic.”
Tyson Foods said will continue to provide meat ingredients for the business after General Mills takes over.
Tyson Foods entered the pet treat market with the launch of True Chews dog treats in 2010. It added to the Nudges brand in 2011 and Top Chews in 2012.
Best known for Cheerios, Betty Crocker and Pillsbury, General Mills entered the pet food business in a big way in 2018, spending $8 billion to acquire Blue Buffalo, a premium brand, and giving many analysts sticker shock.
Then the pandemic hit, fueling the biggest surge of pet adoptions in recent memory. About 12.6 million U.S. households got a new pet last year after the pandemic was declared in March 2020, according to a COVID-19 Pulse Study by the American Pet Products Association.
Third-quarter net sales from General Mills’ pet business, which ended in February, jumped 14 percent to $436 million, and through nine months of the fiscal year, sales are up 13 percent to $1.29 billion.
Under General Mills, Blue Buffalo’s sales have grown at a 10% compound rate, with the last 12 months bringing in more than $1.7 billion. Profit from Blue Buffalo are growing even faster, from about $300 million in 2017, before General Mills acquired it, to more than $400 million in the past 12 months.
“Pet food is a high-growth category, fueled by the humanization of pets, a trend that has only increased during the pandemic,” said Bethany Quam, the head of General Mills’ pet division.
The acquisition of Tyson’s pet treat business is expected to have an estimated tax benefit of $225 million, bringing the effective purchase price to $975 million, General Mills said.
(The Associated Press contributed to this report.)
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