Nestle completes deal to purchase Ralston Purina
Thursday, December 13, 2001
ST. LOUIS -- One day after receiving approval from federal regulators, Swiss-based Nestle S.A. completed on Wednesday its $10.3 billion purchase of pet-food leader and St. Louis institution Ralston Purina Co.
The 107-year-old Ralston, which was started as a horse-feed business in 1894 by William Danforth, joins the late Trans World Airlines Inc. as the latest local company absorbed by a rival.
But unlike the long-struggling TWA, swallowed out of bankruptcy court this year by AMR Corp.'s American Airlines, Ralston is a healthy concern targeted by Nestle for its dominate position in the dry pet food market.
"This company will continue to have a huge payroll in this community," said Patrick McGinnis, Ralston's president and CEO who will hold the same position at newly created Nestle Purina PetCare Co. "This company will continue to be a tremendous taxpayer in this community. It will be a corporate citizen and charitable contributor in this community, as it has been in its 107-year history."
Nestle Purina PetCare, the combination of Ralston and Nestle's pet business, will house its North American business in St. Louis at Ralston's headquarters south of downtown, know affectionately as "Checkerboard Square."
Nestle is paying $33.50 per Ralston share, a 36 percent premium above the price of shares when the deal was announced in January. Annual revenues of Nestle Purina PetCare, based on Ralston and Nestle combined revenues in 2000, are $3.7 billion in North America and $6.3 billion worldwide.
While most personnel decisions have yet to be fully made, executives of the subsidiary expect to add jobs in St. Louis.
"Pet care was considered a global, strategic growth area," said Joe Weller, Nestle USA's chairman. "Pet care is growing in the United States and we expect this trend to continue."
McGinnis said about 125 people have left the company since the buyout was announced, all through voluntary early retirement or attrition, while Nestle is moving 60 people to St. Louis from its California operation.
"We like St. Louis," Weller said. "I think the fact that we are moving 60 families here speaks to our commitment to St. Louis. Most of our factories are in the Midwest, so it's a natural place for us to be."