Nestle May Buy Ralston Purina

Monday, January 15th 2001, 12:00 am

By: News On 6

NEW YORK (AP) â€” Nestle SA, the Swiss food manufacturer whose products include the Friskies and Alpo pet food brands, is reportedly close to a deal to buy Ralston Purina Co., maker of Purina Dog Chow, for $10 billion in cash.

Negotiations are at an advanced stage and a deal could be announced in the next few days, The Wall Street Journal reported Monday, citing a person familiar with the situation.

It is believed that Nestle is offering nearly $33 for each share of Ralston, roughly 34 percent above the St. Louis-based company's closing stock price Friday of $24.63 on the New York Stock Exchange.

Nestle declined on Monday to comment on the report. A Ralston spokesman did not immediately return a call to The Associated Press.

Ralston controls 27 percent of the $4.3 billion dog-food market, while Nestle accounts for roughly 12 percent, the Journal reported. Ralston is also a leader in cat food sales, holding 33 percent of the $2.6 billion market, with Nestle making up for an additional 13 percent.

An agreement would likely receive antitrust scrutiny and the companies could be required to trim their pet food businesses in order to gain regulatory approval.

Rival companies with significant pet-food units, such as Procter & Gamble Co., Colgate-Palmolive Co. and Mars Inc., could try to outbid Nestle, the Journal reported. Nestle, the world's largest food company, produces everything from mineral water to dairy products to coffee. The company is based in Vevey, Switzerland.

Nestle has enlarged its pet food business in the past through acquisitions. In 1985, the company purchased Carnation, which owned Friskies, and in 1994 it added the Alpo brand to its holdings. The company picked up one-fifth of Europe's pet-food market in 1998, when it paid more than $1 billion for Britain's Spillers Pet Food, a subsidiary of Dalgety. Nationwide, dog-food sales grew by about 4 percent last year, while cat food volume grew by roughly 5 percent.

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On the Net:

http://www.nestle.com

http://www.purina.com