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Procter & Gamble may sell Iams, analysts say

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By John Nolan, Staff Writer Updated 7:26 PM Tuesday, November 3, 2009

Procter & Gamble Co. may sell off Iams, the pet food business it bought in 1999 for $2.3 billion, as P&G focuses on business categories where it sees greater long-term potential for increasing sales, industry analysts said Tuesday, Nov. 3.

The consumer products company, with $79 billion in worldwide sales for its latest fiscal year, has identified beauty and grooming, consumer health and well-being, and household care as its key areas for boosting sales and profits.

Food, whether for animals or humans, is receiving a lesser emphasis. P&G has sold off the Folgers coffee and Jif peanut butter brands, among others, in recent years.

Duracell batteries, Pringles snack chips and Braun small appliances, along with Iams, could be sold off as P&G focuses its efforts, analysts said.

“That is a good list of businesses that don’t quite appear to be what P&G considers core,” said Connie Maneaty, an analyst who follows P&G for BMO Capital Markets in New York. “It doesn’t mean they’re going to sell Iams, but it fits into that category.”

“If it does go on the market, it would be a very attractive item,” Maneaty said of Iams. “It’s still got great equity.”

P&G had initial success in boosting sales of Iams, once a specialty retailers’ product, by making it available through mass-merchandising retailers.

“That was a successful strategy for awhile,” said Doug Lane, an analyst with Jefferies & Co. in Boston. “That’s all well and good, but that’s over.”

The effort P&G put into improving the distribution of the Iams and Eukanuba pet food products would likely make the business more attractive to a buyer, Lane said.

P&G regularly reviews its product portfolio, but won’t comment on what it may do with any specific brand, said Kate DiCarlo, a spokeswoman at P&G headquarters in Cincinnati.

Iams Co. history

1946: Animal nutritionist Paul Iams founds the company.
1999: Clayton Mathile, Dayton entrepreneur, sells Iams Co. to P&G.
2009: P&G announces in May that it would relocate the Iams headquarters and its 240 employees from Vandalia to P&G’s Mason Business Center, near Cincinnati, in October.
2009: Online auction is conducted in October to sell the former Iams headquarters property on Poe Avenue in Vandalia. Sale is pending. The sale does not involve the Iams manufacturing plant and research complex in Lewisburg.

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