MW General Mills is buying its fifth pet food business. Here's why it could fetch more growth.

By Steve Gelsi

General Mills spending $1.5 billion to boost its premium pet food offerings amid a surge in sales in the category

General Mills Inc. has made a name for itself with kitchen-table staples ranging from Honey Nut Cheerios cereal to Betty Crocker cake mix.

Now the packaged food giant is looking to tap into fast U.S. growth in premium pet food category, as part of a series of deals in the pet sector.

General Mills $(GIS)$ said Thursday it's paying about $1.45 billion for the Cloud Star and Tiki Pets brands, as part of its acquisition of Whitebridge Pet Brands' North American premium cat feeding and pet treating business. The seller is NXMH BVBA, a Brussels-based private-equity firm.

The deal marks General Mills's fifth pet food acquisition at a time of rapid growth in the business of caring for America's dogs, cats and other animal friends and family members.

From an estimated $150 billion of spending in 2024, the category is expected to mushroom up to roughly $200 billion by 2030, according to estimates from Bloomberg Intelligence.

This trend has now been embraced by General Mills, one of the largest food companies in the U.S. that has experience in scaling up businesses and keeping costs in line.

Since 2018, the company has already acquired Blue Buffalo, followed by Nudges, Top Chews, and True Chews in 2021, Fera Pets in 2023 and Edgard & Cooper earlier this year.

With a purchase price of $1.45 billion and the annual sales from the Whitebridge business at $325 million, General Mills is paying a multiple of about 4,5 times its revenue for the business.

That's a healthy multiple in the world of mergers and acquisitions, but General Mills appears to be betting that the business will help it boost its bottom line.

The company said the the Whitebridge brands are a "growth leader in the cat feeding and pet treating segments," which amounts to $24 billion in retail sales within the $52 billion U.S. business in feeding pets.

The premium end of the market - where the Whitebridge brands play - also remains attractive, with products such as freshly-prepared meals for cats and dogs gaining traction among millennials concerned about healthy food for themselves and their pets.

Store giants such as Target Corp. $(TGT)$ and Walmart Inc. $(WMT)$ have also been setting aside more shelf space for pet products, according to Supermarket News.

Online sales are also gaining traction through deals such as Instacart $(CART)$ inking a distribution pact with 1,500 PetSmart for delivery services.

And celebrities have been getting into the act as well including Snoop Doggie Dogs from rapper Snoop Dog', and Doggy Parton from counry singer Dolly Parton, as well as Metapink from Paris Hilton.

-Steve Gelsi

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November 14, 2024 08:37 ET (13:37 GMT)

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