The deal between the two will have General Mills acquiring Blue Buffalo Pet Products Inc for $40 per share. This brings the total value of the deal to $8 billion. The $40 per share price tag represents a 23% premium over BUFF stock’s 60-day volume weighted average price.
General Mills notes that the acquisition will establish it as the leader of the U.S. Wholesome Natural pet food category. It also says that the acquisition will help it as it looks to reshape its portfolio of goods.
General Mills is expecting the acquisition of Blue Buffalo Pet Products Inc to be immediately accretive to its net sales growth and operating margin profile. The company also says it will have a neutral effect on its fiscal 2019 earnings per share and will be accretive to its fiscal 2020 earnings per share.
General Mills also says that the deal has the approval of it and Blue Buffalo Pet Products Inc’s Boards of Directors. The deal still needs to complete of customary closing conditions and receive regulatory approval. GIS is expecting the deal to close by the end of its fiscal 2018 year.
Blue Buffalo Pet Products Inc was founded in 2002. The company’s revenue for the fiscal year of 2017 came in at $1.28 billion. It also reported Adjusted EBITDA of $319 million for this period.
BUFF stock was up 16% and GIS stock was down 3% as of noon Friday.
As of this writing, William White did not hold a position in any of the aforementioned securities.