Nutritional food leader ADM has greatly expanded its pets business, acquiring a stake in four leaders in private brand pet treats and supplements.
Chicago-based ADM has acquired a 75% ownership stake in private brand pet products leaders PetDine, Pedigree Ovens, The Pound Bakery and NutraDine (all companies under P4 Companies).
The transaction values the four enterprises in their entirety at approximately $600 million, and ADM will acquire 75% of the equity, subject to customary adjustments.
“We’re continuing to advance our growth strategy and transform our company with targeted investments that expand our capabilities in large, high-growth segments, including pet nutrition — a key focus of our growing animal nutrition business,” said Vince Macciocchi, president of ADM’s nutrition business. “Annual global sales of pet food total $110 billion, forecast to grow to $140 billion by 2026 — with pet treats an even faster-growing category.”
With more than 300 employees, P4 Companies provides a complete range of highly customized pet treat and supplement products to more than 650 customers in 15 countries. The private label items include baked treats, semi-moist treats, long goods, blends, unique proteins, soft chews, liquids and powders, many of which are developed to meet the demand for clean labels.
ADM will also acquire P4’s 300,000-square-feet of state-of-the-art production and innovation facilities in Illinois and Colorado, where the four companies are located. Additionally, the agreement includes a put/call option under which the parties could agree for ADM to purchase the remaining 25% at an agreed-upon market price in the coming years.
“As a group, our companies PetDine, Pedigree Ovens and The Pound Bakery, have become clear leaders in the pet supplement and treat space,” said Preston Munsch, CEO, PetDine. “Through innovation, R&D and manufacturing expertise, we have become important strategic partners to brands around the world. Through this new and exciting partnership with ADM, we will be able to advance our customers’ lead positions in the pet industry even further. Through their extensive list of ingredients combined with their Animal Nutrition Technology Center and worldwide resources, we are excited to merge our knowledge and expertise to continue to be innovative leaders in the pet industry.”
PetDine, Fort Collins, Colo., especially has been on an upward trajectory, recently building a 1,200-square-foot facility dedicated to researching new products and testing technology to develop pet supplements for private label. The company also furthered its sustainability commitments in the space.
Lexie Berglund, president of The Pound Bakery in Harvard, Ill., a pet treat provider said, P4 has shown a strong commitment to sustainable practices, and in 2020, announced that The Pound Bakery production facility was now powered with solar power, with the capacity to offset almost 1,500 tons of greenhouse gas emissions annually.
“ADM’s global resources — from ingredient supply chain, transportation and their emerging pet nutrition platform — are what we were looking for in a partner,” said Kurt Stricker, owner, Pedigree Ovens, another pet treat supplier in the P4 group. “We are excited to continue our strong growth path together.”
The proposed transaction between ADM and P4 is subject to regulatory approvals, and is expected to be completed in the coming weeks.
“Two years ago, ADM identified the humanization of pets — owners who want to provide their companion animals with the same kind of clean, simple, healthy products they eat themselves — as an important growth trend,” Macciocchi said. “This partnership positions ADM perfectly to continue to meet those needs. We’re excited to partner with the great P4 team, and we look forward to collaborating with them to combine their best-in-class customized solutions with ADM’s extensive pantry of ingredients, natural colors, and flavors; application development expertise; rapid prototyping and innovation capabilities; and global go-to-market footprint.”
He added that the company has grown to meet demand over the years from the construction of new production facilities, to the additions of pet treat and food provider Crosswind and Neovia’s global pet nutrition business, to the opening of an industry-leading Animal Nutrition Technology Center in Decatur.
“Now, we’re taking the next step in our strategic journey with a majority investment in P4. We’re excited by this agreement, which we expect to exceed our hurdle rates and financial return targets as we partner with an innovative, high-growth business with a great track record of working closely with customers around the globe to develop and produce best-in-class pet products,” Macciocchi said.