Mars Inc is buying pet hospital operator VCA Inc for $7.7 billion in a deal that will tighten the Whiskas and Pedigree pet food maker’s grip on the pet care market.
The deal will help privately held Mars, better known for candies such as M&M’s and Snickers, add about 800 pet hospitals to its network of more than 900 clinics, which includes the 61-year-old Banfield pet hospital chain.
The combination of Mars Petcare and VCA will dominate the veterinary care industry in the United States, grabbing an even bigger share of the nearly $4 billion global pet care market.
McLean, Virginia-based Mars is already the biggest pet food company in the world – it held a quarter of the global pet food market as of 2015 – followed by Nestle SA, the maker of the Purina cat and dog food brand.
Mars has been diversifying its business as calorie-conscious consumers increasingly shun chocolates and candies, a trend that has weighed on the $183 billion global confectionery market.
Rival Hershey Co is also expanding beyond chocolates – it bought Krave, a beef jerky maker, in 2015, while Mondelez International Inc recently introduced Good Thins, its first snack brand in more than a decade.
Mars said it would offer $93 per share, a premium of 31.4 percent to VCA’s Friday closing price. Including debt, the deal is valued at $9.1 billion.
VCA’s shares were up 28.3 percent at $90.78 in early trading on Monday. The company, founded in 1986, had annual sales of $2.13 billion in 2015.
Mars, which also owns the BluePearl chain of emergency and specialty veterinary care clinics, had annual pet food sales of $17.80 billion in 2015, according to Euromonitor data.
Morgan Stanley & Co. LLC and BDT & Co were Mars’ financial advisers, while Skadden, Arps, Slate, Meagher & Flom provided legal advice.
Barclays was VCA’s financial adviser and Akin Gump Strauss Hauer & Feld LLP and Potter Anderson Corroon LLP were legal advisers.