By Evan Ramstad

Minneapolis Star Tribune

MINNEAPOLIS—General Mills for 15 years has bought fast-growing makers of natural and organic foods, repositioning itself as food habits changed. On Friday, it bought the biggest name in wholesome pet foods, Blue Buffalo.

The deal, valued at $8 billion, is the second-biggest in the 151-year history of General Mills.

The company is paying substantially above average for Blue Buffalo, as measured by a multiple of that company’s profits. But the deal will immediately boost General Mills’ sales by about 10 percent.

“We were looking for a company that was growing, that was purpose-driven, that would fit into the rest of our portfolio of brands, something that would be consistent with what we did,” said Jeff Harmening, chief executive of General Mills. “Blue Buffalo fit all those criteria.”

Blue Buffalo Pet Products, started in 2002 by a family that grew concerned about pet food after a family dog got cancer, has grown to a $1.2 billion seller of pet food that is billed as more wholesome and commands premium prices. It has taken advantage of the same rise in consumer demand for better understanding of food ingredients that has driven fast growth for natural and organic food makers.

“Everybody is wanting to feed better quality foods for all of their family members,” said Billy Bishop, Blue Buffalo CEO and a co-founder with his father and brother. They named the company after the family dog at the time, Blue.

With Blue Buffalo, General Mills is getting a company that is still in a period of very fast growth. Blue Buffalo reported 2017 sales growth of 11 percent and expects another double-digit increase this year. Its full-year adjusted profit rose 25 percent.

“The fact that Blue Buffalo is a company that has grown its top line double digits and its bottom line even faster and is accretive to margins didn’t escape our attention,” Harmening said. “They’re in segments and channels we play in … You don’t find many businesses like that.”

The Blue Buffalo deal is second to General Mills’ acquisition of Pillsbury for $10.5 billion in 2000. Its biggest deal in recent years was the $820 million purchase in 2014 of Annie’s Inc., a California-based maker of organic pastas and other products.

General Mills is paying about 25 times the value of Blue Buffalo’s earnings before taxes and other costs, which is well above the 16.5 times multiple that is average for corporate acquisitions, analyst Alexia Howard at Bernstein wrote in a note. She noted the company paid a 28 times multiple for Annie’s three years ago.

General Mills made and sold pet food back in the middle part of the 20th century. Pillsbury owned the Alpo brand for many years but sold it in the 1990s before the company was purchased by General Mills.