GIS General Mills Inc

By Dave Sebastian

General Mills Inc. has agreed to buy Tyson Foods Inc.'s pet-treats business for $1.2 billion in cash, the companies said, a deal that would complement General Mills' pet-food unit.

The deal would provide an estimated tax benefit of $225 million, equating to an effective purchase price of $975 million, General Mills said Friday. The Tyson unit includes the Nudges, Top Chews and True Chews brands.

"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, General Mills' group president for the pet segment.

General Mills said it plans to fund the acquisition with cash on hand and short-term borrowing. It expects the deal to modestly add to its earnings in the first year after completion, excluding transaction and integration expenses.

Tyson said it will continue providing meat ingredients for the pet-treats business after the deal closes. The pet-treats business generated more than $240 million for the year ended April 3, the company said. The business has about 300 employees, who will become part of General Mills, it added.

Tyson said General Mills is also buying a manufacturing facility in Independence, Iowa, as part of the deal.

General Mills said it expects the deal to close in its first quarter of fiscal 2022.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

May 14, 2021 07:06 ET (11:06 GMT)

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