April 9, 2014 / 2:13 PM / in 3 years

Mars to buy most of P&G's pet food business for $2.9 billion

An employee holds a tray of M&M's candies at the production line of candy and chocolate maker Mars Chocolate France's plant in Haguenau, eastern France, December 13, 2011.Vincent Kessler

(Reuters) - Confectionery company Mars Inc said it would buy Procter & Gamble Co's pet food brands IAMS, Eukanuba and Natura in the United States and Latin America for $2.9 billion to beef up its pet food business.

Mars will buy the rights to the three brands in North America, Latin America and other regions excluding most European markets, the companies said in a statement on Wednesday.

The regions included in the deal account for about 80 percent of P&G Pet Care's global sales.

Mars, whose Petcare business includes brands such as Pedigree, Whiska, Banfield and Royal Canin, also has the option to acquire the brands in several other countries.

P&G said it was working on alternate plans to sell its Pet Care business in European Union countries.

P&G said it expected core earnings to be reduced by 3 cents per share in fiscal 2013 and by 4 cents per share in fiscal 2014 after it accounts for the business as a discontinued operation.

P&G said it did not expect the deal to hurt its forecast for core earnings growth per share for 2014 or have a material impact on 2015 results.

Mars, controlled by the Mars family, had annual sales of more than $33 billion in 2013 and was ranked 5th in Forbes' list of America's largest private companies. P&G had sales of $84.16 billion in 2013.

P&G shares were up 0.8 percent at $81.98 in early trading on the New York Stock Exchange.

(Corrects spelling of "confectionery" in first paragraph)

Reporting by Siddharth Cavale and Shailaja Sharma in Bangalore; Editing by Savio D'Souza

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