(Reuters) -General Mills said on Thursday it would buy Whitebridge Pet Brands' North American premium cat feeding and pet treating business in a transaction valued at $1.45 billion to broaden its portfolio and strengthen its pet food business.
The company is buying the pet business from a European private investment firm NXMH, which will retain Whitebridge Pet Brands' European operations.
General Mills (NYSE:GIS) said the deal would help it focus on its core brands such as Cocoa Puffs and Cheerios along with its pet food business to drive steady sales growth.
Deal-making in the packaged food industry has been robust over the past year as companies that lost market share to private labels due to repeated price hikes try to broaden their portfolios and add better-performing brands.
Whitebridge, which includes the Tiki Pets and Cloud Star brands, is General Mills' fifth pet brand acquisition, building on its 2018 purchase of pet food company Blue Buffalo for $8 billion to strengthen its pet business.
General Mills said the North American Whitebridge Pet Brands business generated about $325 million in U.S. Nielsen-measured retail sales in the past twelve months. General Mills' pet segment contributes 12% to its annual sales.
The company aims to complete the acquisition by the third quarter of 2025.
General Mills posted a smaller-than-expected drop in third-quarter sales in September, as higher snacks and pet food prices offset a demand slowdown.
While pet foods peer Chewy (NYSE:CHWY) has consistently reported strong sales numbers and growth in recent quarters fueled by a boom in pet owners who are on the lookout for branded food products.
Packaged food makers are also divesting units that are not delivering high growth to control costs, with General Mills in September selling its North American yogurt business to French dairy firms Groupe Lactalis and Sodiaal in a $2.1 billion deal.