<p>SILVER SPRING, Md. — General Mills is diving further into the red-hot pet food market, acquiring Tyson Foods’ animal treat business for $1.2 billion in cash, the companies said Friday.</p>
<p>Best known for Cheerios, Betty Crocker and Pillsbury, General Mills in 2018 entered the pet food business in a big way, spending $8 billion to acquire Blue Buffalo, a premium brand. </p>
<p>Then the pandemic hit, fueling the biggest surge of pet adoptions in recent memory. </p>
<p>About 12.6 million U.S. households got a new pet last year after the pandemic was declared in March 2020, according to a COVID-19 Pulse Study by the American Pet Products Association.</p>
<p>When General Mills released quarterly earnings this spring, it became clear that the animals taken home from shelters during the pandemic were not the only winners. </p>
<p>Third-quarter net sales from General Mills’ pet business, which ended in February, jumped 14 percent to $436 million, and through nine months of the fiscal year, sales are up 13 percent to $1.29 billion. </p>
<p>Under General Mills, Blue Buffalo’s sales have grown at a 10% compound rate, with the last 12 months bringing in more than $1.7 billion. Profit from Blue Buffalo are growing even faster, from about $300 million in 2017, before General Mills acquired it, to more than $400 million in the past 12 months.</p>
<p>That is the period that ran the gamut of the global pandemic.</p>
<p>Three years ago when General Mills said it would buy Blue Buffalo for $8 billion, a number of industry analysts had sticker shock.</p>
<p>But Blue Buffalo has driven growth with double-digit sales in both dog and cat foods and the company has registered overall sales growth in 12 of the past 14 quarters. </p>
<p>The acquisition of Blue Buffalo was part of the company’s campaign to revive sales that declined in 15 of 16 quarters between 2013 to 2017. The 150-year old food giant has modernized its portfolio of brands as Americans shift away from processed foods. It’s been acquiring organic and natural foods brands for humans as well.</p>
<p>General Mills did sell pet food back in the 1950s and from all appearances, it’s back in the business to stay. </p>
<p>“Pet food is a high-growth category, fueled by the humanization of pets, a trend that has only increased during the pandemic,” said Bethany Quam, the head of General Mills’ pet division. </p>
<p>The acquisition of Tyson’s pet treat business is expected to close in the first quarter of fiscal 2022, with an estimated tax benefit of $225 million, bringing the effective purchase price to $975 million, General Mills said. The deal includes the Nudges, Top Chews and True Chews brands.</p>
<p>Shares of General Mills Inc., based in Minneapolis, edged higher Friday. </p>
