April 9, 2014 / 2:13 PM / in 4 years

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

(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.

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. REUTERS/Vincent Kessler

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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