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Mars, best known for its chocolate, bets $10.5 billion on pets

The company name Mars evokes images of M&M;'s, Snickers and Dove chocolate, and possibly Wrigley chewing gum.

Soon, a majority of its business will be related to pets, thanks to a $US7.7 billion ($10.5 billion) acquisition.

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The Nasdaq hits a new record high and shares of veterinary hospital operator VCA soar after Mars said it was buying the company.

Mars agreed to buy VCA, a company that owns about 800 animal hospitals, a lab business and dog day care franchises that operate under the name Camp Bow Wow. VCA will be part of Mars Petcare but will operate as a "distinct and separate business unit", the companies said in a statement on Monday.

Poul Weihrauch, the president of Mars Petcare, said in an interview that Mars' "love story" with pets goes back to 1935. That year, Forrest Mars Snr bought Chappell Brothers, giving the confectionary company access to Chappie brand canned dog food. Mars increased its pet offerings in the 1990s, introducing brands like Pedigree and Whiskas.

Today, Mars has 39 brands in its Petcare portfolio, its second-largest division. With this deal, Petcare will become its largest business, as VCA adds about $US2 billion in revenue. Together, Petcare, chocolate and Wrigley contribute 90 per cent of company sales.

The impetus for the acquisition goes back years. Mars, based in McLean, Virginia, uses VCA's lab services in its veterinary businesses. Talks about a deal began when Mars approached VCA in November. VCA, based in Los Angeles, had been an independent company for more than 30 years, and Bob Antin, the chief executive, said it was not looking to sell.

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But Antin said the prospect of joining Mars was intriguing.

Merging with Mars, which is privately held, rid VCA of the challenges of being a public company, including the difficulty of justifying large investments in research and development, Mr Antin, 66, said in an interview. He said he would remain chief executive of the unit after the acquisition closed.

"We'll be able to leverage off their technology, and the amazing part about it is their company is focused on what's best for veterinarians," Mr Antin said.

Mars agreed to acquire VCA for $US93 a share in cash, 31 per cent higher than where the shares closed on Friday. VCA traded at a high, up 28 per cent to $US90.60 a share, after news of the acquisition. Including debt, the deal is valued at $US9.1 billion.

The transaction has been approved by both boards but still needs approval from VCA shareholders and regulators. The companies said they expected the transaction to close in the third quarter of this year.

New York Times