Mars Takes Bigger Bite of Pet Healthcare Market with $7.7bn Purchase of VCA

10 Jan 2017 --- Mars is expanding its footprint in the pet healthcare market by acquiring the veterinary hospital chain VCA for $7.7bn. Mars is to pay $93 a share in cash for one of North America’s biggest providers of pet healthcare services , which is a 31 percent premium of VCA’s share price of $70.77 on Friday. The acquisition comes as Mars is looking to shift sales away from its confectionery business-which includes brands such as M&Ms, Snickers and Mars-to counter the trend of consumers shunning sugary sweets. 

It also comes as pet owners, particularly in the US, are spending an increasing amount of money on the welfare of their pets.

Mars, which owns the Pedigree, Whiskas and upmarket Royal Canin pet food brands, is already the biggest pet food company in the world by sales and has been expanding into the animal healthcare field in recent years.

It has a growing business in pet DNA testing and already owns Banfield Pet Hospital, which runs more than 900 animal hospital and clinics in the US and Puerto Rico, which will now be complemented by around 800 pet hospitals and 60 diagnostic laboratories throughout the US and Canada.

Mars said its pet business, following the purchase of VCA, will now “provide an unprecedented level of access to high quality veterinary care for pets, from wellness and prevention to primary, emergency and specialty care”.

VCA, founded in 1986 in Los Angeles, is a major pet healthcare company and operates across four divisions: veterinary services, laboratory diagnostics, imaging equipment and medical technology, and pet care services. In 2015, VCA made sales of $2.13bn.

Shares in VCA were up over 28 percent to $90.79 following the news of the deal which including debt is valued at $9.1bn.

“We are thrilled to welcome VCA to the Mars family and to our portfolio of brands and businesses around the world,” said Mars CEO Grant F. Reid. 

“VCA is a leader across pet health care and the opportunity we see together—for pets, pet owners, veterinarians and other pet care providers —is tremendous. We have great respect for VCA, with whom we share many common values and a strong commitment to pet care. Together, we will be able to provide even greater value, better service and higher quality care to pets and pet owners.”

“Joining the Mars family of brands provides significant value to our stockholders while also preserving the Company's values and a culture focused on investing in our people and facilities to promote excellence in pet care and long-term growth,” said VCA CEO Bob Antin. 

“Mars has a long-standing commitment to pet health, wellness and nutrition. We will work together every day to continue to provide the quality care and excellent service VCA is known for to our clients and their pet families.”

“We have always been impressed by VCA and the excellent services it offers to pets across diverse business segments,” said Mars Global Petcare President Poul Weihrauch. 

“VCA's industry-leading partnerships with veterinarians and pet care providers together with its expertise in veterinary services, diagnostics and technology will position Mars to deliver accessible, quality care and continue to create a better world for pets. VCA's philosophy of partnering with the veterinary profession and educational institutions is aligned with our core values and culture. We look forward to together providing the best care possible for pets.”