In 2018, General Mills made an $8 billion bet on pet food by purchasing the pet food company Blue Buffalo. The move was a departure from its traditional business for the company which made its name by making iconic cereals such as Cheerios and Lucky Charms.
Now, the company is doubling down on the pets category by buying the dog snack division of Tyson Foods to its portfolio for $1.2 billion. General Mills appears to be riding the wave of pet adoptions that took place during the pandemic by adding to one of its fastest growing segments.
While the purchase price of $1.2 billion may seem a bit high, the company will benefit from approximately $225 million in tax savings related to the deal, which will effectively lower the cost to General Mills below $1 billion.
The pet treats portfolio generated $240 million in sales in the twelve months leaving up to April 3rd, and is expected to be accretive to General Mills’ earnings within the first twelve months after the deal closes.