Pet Care Business
When you look at Nestle’s seven operating segments all but one are intended for humans. The company’s pet care business sticks out like sore thumb, despite being its second-most profitable business — behind only its powdered and liquid beverages division (Coffee-Mate, Carnation, Nesquik).
CEO Paul Bulcke feels that other brands are more in need of a fix than Nestle’s pet business. However, back in May, privately held Del Monte paid $341 million (1.1 times sales) for Natural Balance. If Nestle put Purina and the rest of its pet care business on the block, it could see as much as $13 billion, if not more.
Who could make such a deal? Warren Buffett, for one. Although the transaction is bordering on “too small” for Berkshire Hathaway (BRK.B), Purina is a nicely profitable midwestern company based in St. Louis, just 420 miles from Omaha. I have no idea if Buffett likes dogs and cats, but I know he likes making money, and this business continues to do so.