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J.M. Smucker plans to sell several pet food brands to Post Holdings in a cash-and-stock deal valued at around $1.2 billion.

Why it matters: The deal gives Post an entryway into the thriving pet food market, with U.S. consumers spending over $123 billion on their pets in 2021, according to SDR Ventures.

That market size is fueling a flurry of activity, with CPG and health care companies, and private equity firms all taking an interest.

Details: The deal between the two CPG giants will consist of $700 million in cash and about 5.39 million shares of Post stock.

The deal includes Smucker’s Rachael Ray Nutrish, 9Lives, Kibbles 'n Bits, Nature’s Recipe and Gravy Train brands, as well as its private-label pet food business. It will still retain its Milk-Bone and Meow Mix businesses.

The transaction is expected later this year and is projected to be dilutive to Smucker’s adjusted EPS by 45 cents on a full-year basis.

What they’re saying: “The acquisition will provide Post with a compelling entry point into the attractive and growing pet food category,” the company said in a statement.

Post, which owns brands such as Weetabix and Bob Evans Farms, will create a new pet food platform within its Post consumer brands segment, which will be led by unit president Nicolas Catoggio.

State of play: With a slow economy, pet sales can play an important role in propping up companies that might otherwise be vulnerable to a pullback in consumer spending and will also feed their need to find new markets, Axios’ Nathan Bomey wrote in July.

The big picture: Large corporate conglomerates have been taking a fine-tooth comb through their portfolios in the past few years in a bid to simplify their businesses.

In December, Oreo parent Mondelēz said it will sell its gum business in developed markets to Perfetti Van Melle Group, a European gum and confectionery maker.

Smucker itself has been pruning its portfolio for the last several years, offloading its baking products, its juice and grains business, and its private-label dry pet food brand.

Meanwhile, last year, in the pet food space, Mars acquired direct-to-consumer pet food brand Nom Nom Now for a reported $1 billion and Canada-based Champion Petfoods in November.

Swedencare snagged U.S.-based pet supplement maker NaturVet for $448 million.

J.M. Smucker sells some pet food brands to Post Holdings

Smucker’s 9Lives, Kibbles ‘n Bits, Nature’s Recipe and Gravy Train brands will go to Post.

Caption: Rachael Ray at a celebration for her pet food brand, Nutrish. Photo: Cindy Ord/Getty Images for Nutrish

Rachael Ray at a celebration for her pet food brand, Nutrish. Photo: Cindy Ord/Getty Images for Nutrish

Deals

J.M. Smucker plans to sell several pet food brands to Post Holdings in a cash-and-stock deal valued at around $1.2 billion.Why it matters: The deal gives Post an entryway into the thriving pet food market, with U.S. consumers spending over $123 billion on their pets in 2021, according to <a class="gtmContentClick" data-vars-link-text="SDR Ventures" data-vars-click-url="https://link.axios.com/click/30503608.438/aHR0cHM6Ly9zZHJ2ZW50dXJlcy5jb20vd3AtY29udGVudC91cGxvYWRzLzIwMjIvMDgvRGVhbC1Ib3VuZC1QZXQtUmVwb3J0LTFILTIwMjIucGRmP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1wcm9fZGVhbHNfcmV0YWlsX3N1YnMmc3RyZWFtPXRvcA/6241b97a2bec4503a570c049Bf38f61dc" data-vars-content-id="9bf69725-a5f4-4880-8197-d89c3af2c58b" data-vars-headline="J.M. Smucker sells some pet food brands to Post Holdings" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/30503608.438/aHR0cHM6Ly9zZHJ2ZW50dXJlcy5jb20vd3AtY29udGVudC91cGxvYWRzLzIwMjIvMDgvRGVhbC1Ib3VuZC1QZXQtUmVwb3J0LTFILTIwMjIucGRmP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1wcm9fZGVhbHNfcmV0YWlsX3N1YnMmc3RyZWFtPXRvcA/6241b97a2bec4503a570c049Bf38f61dc" target="_self">SDR Ventures</a>.

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J.M. Smucker sells some pet food brands to Post Holdings

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