10.01.2017

Mars expands in pet care with $7.7 billion purchase of VCA

Candy giant Mars Inc., facing a slowdown in packaged food, is making a bigger bet on a booming industry: pet care.

The maker of M&Ms and Snickers agreed to buy the animal-hospital chain VCA Inc. for about $7.7 billion on Monday — not including debt — expanding on its existing veterinary-care business. Mars will pay $93 a share in cash, a 31 percent premium to VCA’s closing price of $70.77 on Friday.

The acquisition turns Mars into a dominant company in corporate-owned pet hospitals, an area that’s exploded in recent years — helped by Americans treating their pets more like family members. It also could help bolster Mars’s current pet brands, including Pedigree and Whiskas.

At a time when human food isn’t growing as quickly, the deal may make more sense for Mars than buying another snack business, said Ken Shea, an analyst at Bloomberg Intelligence. “They see growth and they see diversity,” he said. “Why double down on food when it’s not growing that fast?”

The total value for the deal is about $9.1 billion, including $1.4 billion in outstanding debt. Shares of VCA, which trade under the ticker symbol WOOF, surged 25 percent Monday to $90.79 after the transaction was announced.


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