Mars is buying the pet health care company VCA in a deal valued at around $7.7 billion. (Orlin Wagner/Associated Press)
  
Candy giant Mars Inc., is digging even deeper into the world’s love affair with pets with the $7.7 billion acquisition of VCA Inc., a veterinary and doggie day-care company based in Los Angeles.
The purchase by McLean-based Mars, the privately held maker of Snickers, Spearmint gum, Milky Way and M&M’s candies, represents a doubling down on its 80-year-old pet business, which includes veterinary services, food brands and nutritional products.
“We have always been impressed by VCA and the excellent services it offers to pets across diverse business segments,” Mars Global Petcare President Poul Weihrauch said in a news release Monday.
Mars is already the owner of Banfield, a fleet of more than 1,000 veterinary clinics and hospitals, many of which are located inside Petsmart stores. The VCA acquisition will help grow Mars’s pet business into the company’s largest segment by sales, passing the candy and gum sector.
The move, approved by both boards of directors and expected to close in the third quarter, is designed to capi­tal­ize on Americans’ growing attachment to their pets.
Americans spent an estimated $62.75 billion in 2016 on their animals, according to the American Pet Products Association. That is up from $51 billion only five years ago. As pets move from the doghouse into the house, they have become part of the American family. As as result, many owners have grown inured to the health care costs that go with keeping their beloved pets around as long as possible.
“The spending continues to go up, year after year,” said Bob Vetery, president of the pet products association. “This humanization trend is no longer just a myth. It’s past the tipping point. We are seeing health benefits being backed up more and more by science. We can see that pets are keeping us healthy, and as a result we are trying to keep them healthy longer.”
While most people associate Mars with candy, the company has been diversified for decades. Mars’s five businesses are Mars Wrigley Confectionary, Mars Drinks, Mars Food, Mars Petcare and Symbioscience. Mars Petcare, based in Belgium, began in 1935, has 40,000 employees and operates in 50 countries.
In a note accompanying the announcement, Raymond James analyst Nicholas Jansen said, “we simply believe Mars, who already is active in the industry beyond the Banfield ownership, found VCA to be an attractive long-term asset, and we would expect the two businesses to complement one another quite nicely.”
VCA, founded as a single facility in 1986, provides pet health care services through a nationwide clinical laboratory system and more than 750 free-standing animal hospitals, according to the Raymond James note.
The company also sells diagnostic imaging equipment, other medical technology products and related services to veterinarians. It provides them with online communications, professional education, marketing solutions and an e-commerce platform. It will operate as a separate business within Mars Petcare.
Mars will acquire all of the outstanding shares of VCA for $93 per share, or a total value of $9.1 billion including $1.4 billion in debt. The price is a 31 percent premium above VCA’s closing price on Friday.
Besides Banfield, Mars Petcare’s vast portfolio of veterinary services includes Bluepearl Veterinary Partners. It’s food line includes Whiskas, Pedigree and Royal Canin. It even has a growing business in pet DNA testing.
Family-owned Mars operates in 78 countries and employs 80,000. It is famously private about its finances and operations. It was ranked the seventh-largest private company in America by Forbes magazine in 2015.
The confectionary/gum/pet company has acknowledged annual revenues of $35 billion. It bought the Wm. Wrigley Jr. Company in 2008 for $23 billion with financing help from billionaire Warren Buffett. The company bought out Buffett’s lucrative minority stake in Wrigley in October.
The firm dates back a century to Frank Mars, who began making chocolate in his Tacoma, Wash., kitchen. His son, Forrest Mars Sr., took the chocolate company to new heights with M&Ms, Snickers and Milky Way. Mars Sr. died in 1999, leaving four children. His son, Forrest Mars Jr., died last July, leaving an estimated wealth of $26.8 billion.
Forrest Jr.’s siblings, Jacqueline and John F. Mars, are among the wealthiest people in America, according to Forbes.