The acquisition brings together Dalgety's Winalot dogfood and Arthur's catfood brands with Quaker's Fido and Felix, which is the fastest-growing brand of catfood in Europe. The deal will be subject to European Commission approval, but if successful will give Dalgety 21 per cent of Europe's £4.9bn petfood market, second only to Mars, whose Pedigree Chum and Whiskas brands give it a share of more than 40 per cent.
Dalgety is paying cash for the deal, which will be funded by a £186m rights issue and the sale of Golden Wonder snacks business and the Homepride flour and sauces subsidiary. Dalgety says it hopes to raise more than £300m from the disposals.
Commenting on the deal, Dalgety's chief executive, Richard Clothier, said: "We needed a breakthrough in petfoods to achieve a powerful position in the market. Up to now, Mars has dominated but now Spillers, together with Quaker will be a strong number two."
He said there was significant scope for and rationalisation in administrative centres, manufacturing operations and marketing. There are likely to be several hundred job losses, though Mr Clothier said the majority would be outside the UK.
The deal was welcomed in the City as a sensible strategic move and the shares rose 23p to 419p. Tim Potter at Smith New Court said: "If Dalgety wanted to be big in petfood it had to go for Quaker once it was put up for sale. In the end it was a two-horserace between them and Nestle."
Dalgety's interim results showed that for the six months to 31 December profits rose by 8 per cent to £61m on sales of £2.55bn. The interim dividend was increased by 6 per cent to 8.5p a share.
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