Skip to Content
Market Update

Feeding Frenzy among Food Makers Fuels Funds

Consolidation helps some funds with big food industry weightings.

Swiss food conglomerate Nestle's (NSRGY) decision to get frisky with venerable pet-food giant Ralston Purina (RAL) continues a consolidation binge in the industry that has helped boost the fortunes of funds with big helpings of food makers in their portfolios.

Nestle, a maker of chocolate bars and wet, canned pet food, on Tuesday confirmed it will buy Ralston Purina for about $33.50 per share, or $10.3 billion, in a bid to become the big dog of the pet-food business. The deal will join Nestle's Alpo and Friskies brands with Ralston's Purina products, resulting in combined yearly sales of $6.3 billion. Nestle is paying a 36% premium over Ralston's Friday closing price, which looks somewhat pricey to Morningstar.com stock analyst Aaron Westrate.