General Mills to buy pet food maker Blue Buffalo in $8 billion deal

(REUTERS/Jim Young)

Cheerios cereal maker General Mills will buy Blue Buffalo Pet Products for nearly $8 billion in cash, looking to enter the fast-growing market for natural pet foods, the companies said on Friday.

General Mills' offer price of $40 per Blue Buffalo share represents a premium of 17.2 percent to Blue Buffalo's Thursday closing price. Blue Buffalo's shares were higher at $39.88 in premarket trading.

The deal, which marks Minneapolis-based General Mills' entry into the pet food business, will also help the company offset intensifying competition in the packaged food industry.

General Mills said the deal would make it the leader in the U.S. wholesome natural pet food category, the fastest growing category in the pet food market.

The acquisition will boost General Mills' net sales and profit margins. The deal is expected to be neutral to the company's cash earnings per share in fiscal year 2019 and will add to earnings in fiscal year 2020.

(Reporting by Aishwarya Venugopal and Nivedita Balu in Bengaluru; Editing by Sai Sachin Ravikumar)