Spectrum Brands Holdings Inc., a global and diversified consumer products company with market-leading brands, announced Sept. 23 the signing of a definitive agreement to acquire Procter & Gamble's (P&G) European pet food business, consisting of the complementary IAMS and Eukanuba premium brands for dogs and cats. Financial terms of the transaction were not disclosed.
The business has approximately $200 million of annual sales and will provide Spectrum Brands' United Pet Group division access to the $21 billion European dog and cat food market, which is growing at an estimated 3-5% annually.
"This acquisition will expand and further strengthen our United Pet Group's broad companion animal product portfolio and help to achieve our objective for more balance between our two product segments of aquatics and companion animals," said Dave Lumley, president and chief executive officer of Spectrum Brands Holdings. "We already have a strong European pet supplies infrastructure in place that will enable us to leverage these well-known pet food brands in the U.K and Europe. We also see important synergies in overhead, SG&A and distribution over the next few years."
"This is a strong European pet franchise with outstanding product brand equity and room for growth and margin enhancement," David Maura, Spectrum Brands chairman, said. "As we continue to expand our Pet division organically and by targeted acquisitions, this business will provide more global balance to our pet footprint by further building out our continental European and U.K. market presence. We look forward to the contributions it will make to growing our adjusted (earnings) and free cash flow."
The acquisition, which has been approved by Spectrum Brands' board of directors, is expected to close in 2015 and is subject to customary closing conditions.
In April, P&G announced the sale to Mars Inc. of 80% of its global Pet Care business, including North America and Latin America. Europe was not included in that deal with the exception of Russia and Turkey. Mars later agreed to buy an additional 10% of the business in additional markets including Japan, Australia and South Africa. With the Spectrum transaction, P&G now has closed deals or reached agreements to sell 100% of its Pet Care business. The deal will close in 2015, subject to regulatory approvals.
P&G chairman, president and CEO A.G. Lafley said, "Exiting Pet Care is an important step in our strategy to focus P&G's portfolio on the core businesses where we can create the most value for consumers and shareowners. The transaction creates value for P&G shareowners, and we are confident that the European business will thrive at Spectrum, a leading company in pet care."
The geographic regions included in the acquisition, which account for approximately 10% of P&G's former pet care global sales, include 42 markets throughout Europe.