In order to maintain competition in the roughly $7 billion U.S. pet food market, the FTC required the sale of leading dry cat food brand Meow Mix as well as Alley Cat dry cat food to Hartz Mountain Corp., a pet supply unit of investment firm J.W. Childs Associates LP, before approving the $10.1 billion deal.
Nestle's pet foods business, which includes Friskies cat food and Mighty Dog brands, has annual U.S. sales of roughly $3.7 billion, while Ralston Purina, owner of such brands as Pro Plan and Purina O.N.E, has annual U.S. sales of roughly $2.25 billion. The merged companies will operate under the Nestle Purina Pet Care name out of St. Louis for its North American operations.
Nestle's 32% market share
Nestle now holds 32% of the U.S. cat food market and 10% of the dog food market, while Ralston owns 26% of cat food and 28% share of the dog food market. Competitors include H.J. Heinz Co., Procter & Gamble Co. with Iams, and Masterfoods U.S.A.
The FTC said that without the divestiture Nesle would have an nearly 45% share of the cat food market.
FTC Chairman Tim Muris recused himself from the deal.
At least two commissioners while approving the deal questioned whether J. W. Childs would have the ability to quickly become a viable competitor.
Ralston recently moved its Purina O.N.E. brand from Interpublic Group of Cos.' Lowe Lintas & Partners to Publicis Groupe's Fallon Worldwide, Minneapolis. Other Ralston shops include internal agency CheckMark Communications, St. Louis, and Avrett, Free & Ginsburg, New York. Nestle's dog food brands are handled by Dailey & Associates, West Hollywood, Calif., while McCann-Erickson, L.A. handles Friskies.