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Friday, February 23, 2018

=Blue Buffalo (BUFF) to be acquired by General Mills (GIS) for $40/share

Blue Buffalo confirms deal to be acquired by General Mills (GIS) for $40/share in cash, or approximately $8 bln 
The transaction establishes General Mills as the leader in the U.S. Wholesome Natural pet food category, the fastest growing portion of the overall pet food market, and accelerates its portfolio reshaping strategy. The transaction will be immediately accretive to General Mills net sales growth and operating margin profile, and is expected to be neutral to cash EPS in fiscal 2019 and accretive in fiscal 2020.
  • Following the transaction, General Mills' pro forma net debt-to-EBITDA ratio is expected to be approximately 4.2x. General Mills is committed to maintaining an investment grade rating and expects to deleverage to approximately 3.5x by the end of fiscal 2020. General Mills expects to maintain its $0.49/share quarterly dividend and suspend its current share repurchase program while it prioritizes achieving its leverage target.
  • The transaction, which has been approved by the Boards of Directors of General Mills and Blue Buffalo, is subject to regulatory approvals and other customary closing conditions, and is expected to close by the end of General Mills' fiscal 2018.

Blue Buffalo beats by $0.06, beats on revs; guides FY18 EPS, revs above consensus 
  • Reports Q4 (Dec) earnings of $0.27 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $0.21; revenues rose 14.2% year/year to $336.96 mln vs the $320.58 mln Capital IQ Consensus.
  • Co issues upside guidance for FY18, sees EPS of $1.20-1.24, excluding non-recurring items, vs. $1.08 Capital IQ Consensus Estimate; sees FY18 revs of $1.4-1.43 bln vs. $1.39 bln Capital IQ Consensus Estimate. 

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