PUBLIC VERSION 

UNITED STATES OF AMERICA


BEFORE FEDERA TRAE COMMISSION


In the Matter of 

Nestle Holdings, Inc.


a corporation


Docket No. C-4028


and


Ralston Purna Company,


a co oration


PETITION OF THE CYPRESS GROUP, LLC FOR


PRIOR APPROVAL OF THE SALE OF


THE MEOW MI COMPAN TO DEL MONTE FOODS


Pursuant to Section 2.41(f) of the Commission s Rules of Practice and Procedure, 16 

C.F.R. 9 2.41(f), and Paragraph VI of the Commission s Order i,! the matter of
 Nestle Holdings 

Inc. and Ralston Purna Company (Dkt. No. C-4028), The Cypress Group, LLC ("Cypress 

respectfully requests that the Commission approve the sale of The Meow Mix Company 

TMMC") to the Del Monte Corporation ("Del Monte 

Back2round 

By Order issued in connection with the acquisition of Ralston Purna Company by Nestle 

Holdings, Inc., the Commission required divestitue of the Meow Mix and Alley Cat brands and 

related assets to J.W. Childs Equity Parers II, L.P. ("J. W. Childs ). (Order In the matter of 

Nestle Holdings, Inc. and Ralston Purina Company, Docket No. 4028, Paragraph VI.) The 

Order fuher provided that any subsequent sale of the divested assets before Februar 4 2007 

by J.W. Childs required the Commission s prior approval. (Id.) Pursuant to petition filed by 

13100350.DOC 
PUBLIC VERSION 

W. Childs, the Commission on October 7, 2003, notified J.W. Childs that the Commission had 

granted its approval to sell the business to Cypress, with the proviso that Cypress "shall assume 

the remainder of Childs' obligation" regarding resale of the business before Februar 4 2007. 

(Letter from Donald S. Clark, Secretar, to Claudia R. Higgins, counsel for J.W. Childs Equity 

Parters II, L.P., (October 7 2000 (sic)).) Cypress now seeks the Commission s prior approval 

for sale of The Meow Mix Company to Del Monte. 

The Commission s approval of the sale is appropriate. The proposed transaction wil add 

marketing opportties for more advantageous shelf placement in retail grocery stores and other 

outlets by combining related complementar brands in the pet food category and wil provide the 

combined company important purchasing, distrbution and marketing synergies not available to 

either alone. In addition, transferrg TMMC at this junctue wil not disrupt the competitive 

viability ofthe company. Moreover, in each plausible relevant market, the combination of Del 

Monte with TMMC raises no potentially anticompetitive concerns. On the contrar, the 

transaction will create a stronger and more effcient competitor to Nestle Purna, and thus benefit 

consumers. 

ReQuest for Confidential Treatment 

This petition contains highly confidential and competitively sensitive commercial 

material. The disclosure ofthis confidential information would be likely to har the business 

interests ofTMMC, Cypress, and Del Monte and would likely contravene the Commssion 

stated interest in preserving the competitive potential of the assets subject to its order. Therefore 

both Cypress and Del Monte respectfully request that the confidential information contained in 

this petition not be disclosed to the public and that this petition be accorded confidential 
PUBLIC VERSION


treatment under 5 U. C. 9 552 and Section 4. 1O(a)(2) of the Commission s Rules of Practice 

16 C.F.R. 94. 1O(A)(2). For the purose of obtaining public comment relating to this petition 

Cypress has created, and is fiing with this petition, a public version by redacting confidential 

information. 

Description of the Proposed Transaction 

On March 2, 2006, Cypress entered into a Stock Purchase Agreement with Del Monte 

providing that, subject to Commission approval and other conditions, Del Monte wil acquire 

TMMC for approximately $705 milion. Because TMMC is a self-contained business unt 

among Cypress' several portfolio enterprises , the proposed transaction encompasses all of the 

business operations and assets related to Meow Mix and Alley Cat product lines. A copy of the 

executed Stock Purchase Agreement, including all attachments and exhibits pertaining thereto, is . 

attached to this petition as Confidential Exhibit A. (No copy attached to Public Version. 

Cypress and Del Monte filed a Premerger Notification and Report Form with the 

Premerger Notification Offce of the Federal Trade Commission and the Antitrst Division of the 

Deparment of Justice on . Upon consumation of the planed transaction, Del 

Monte intends to integrate the Meow Mix and Alley Cat brand product lines into its wellrespected portfolio of branded products. 

The Sale of TMMC to Del Monte Wil Neither Disrupt 

TMMC' s Operations Nor Threaten Its Competitive Viabilty 

The purose of the Commission s Order wil be well-served by the proposed transaction. 

TMMC' s business wil be transferred seamlessly to Del Monte, and the robust strength of the 

Meow Mix and Alley Cat brands will be maintained and enhanced under new leadership. The 

transaction will not disrupt research and development, manufactung, sales and promotion or 
PUBLIC VERSION 

distrbution. Indeed, Del Monte s resources and expertise in these areas, including with dog food 

brands in competitive positions simlar to the Meow Mix brands, wil improve on Meow Mix 

already strong performance. 

From two brand names and a co-packig agreement, assets that were neither a cohesive 

unt nor a stand-alone business in 2001 when sold to J.W. Childs for , the proven 

management team ofTMMC transformed the company into a competitive business. With strong 

financial backing, the managers established research and development for new product 

introduction, efficient manufactung and distrbution systems and facilities, and a robust sales 

and marketing force that have cared the company from those begings to the business that 

was sold intact to Cypress for more than $400 milion in 2003 and which is now to be sold to Del 

Monte for $705 milion. The growth in purchase price alone tells much ofthe story ofTMMC' 

competitive vitality. 

TMMC wil thrve within Del Monte. Del Monte s brands include not only cat and dog 

foods and treats 9 Lives, Cycle, Gravy Train, Kibbles 'N Bits, Nature s Recipe, Reward 

Skippy, Meaty Bone, Snausages, Pup-Peroni and Pounce - but also span a wide range of other 

well-recognzed supermarket offering3: Del Monte-branded vegetables, tomatoes and frit; 

Contadina Italian tomato products; College In Broths; and StarKist brand tua. Del Monte 

expertise and infrastrctue can supplement the healthy company that TMMC has become. 

combination with Del Monte s complementar brand portfolio, the Meow Mix and Alley Cat 

lines wil be able to command better shelf-space positioning resulting from being part of a family 

of brands important to every grocer. The Meow Mix and Alley Cat brands are considered highly 

compatible with Del Monte s Kibbles 'N Bits and Gravy Train dog food brands, respectively, 
PUBLIC VERSION 

which wil allow for efficient distrbution and marketing to grocers, enabling them to better serve 

consumers who own both cats and dogs. In addition, becoming par of the Del Monte famly 

wil provide opportties for more effcient distrbution through Del Monte s 18 strategically 

located distrbution centers in North America, and greater state-of-the-ar food and pet food 

research facilities. 

The Combination of Del Monte and TMMC Raises 

No Competitive Concerns Under Section 7 of the Clayton Act 

The cat food category is populated by several major companes, with Nestle Purna Pet 

Care commanding approximately half ofthe dollars in the industr and private-label products 

accounting for approximately 10 percent share. Masterfoods (owned by Mars, Incorporated), 

Procter & Gamble, Hills, and Nutro are all signficant paricipants along with Del Monte 

TMMC and various private-label brands. Market shares alone provide ample basis to conclude 

that an acquisition ofTMMC by Del Monte wil not pose a competitive threat. 

In its complaint issued in connection with the merger of Nestle and Ralston, the 

Commission determned that the sale of dr cat food products distrbuted nationally through 

retail chanels of distrbution including supermarkets, mass merchants, club stores and pet 

specialty stores was a relevant product market for antitrst analysis. (Complaint at -,s 11 , 12 and 

13. We believe that the market conditions that led the Commission to conclude that dr cat food 

represented its own product market remain equally valid today, and also support a fiding of 

relevant product markets for wet cat food and cat treats. TMMC and Del Monte compete in the 

sale of dry cat food, wet cat food and cat treats, and below we present market share information 

about each.

PUBLIC VERSION 

The cat food market shares, based upon IRI Consumer Panel Datal for the 52 weeks 

ending 2/19/06, show the followig market shares, by brand, for dry cat food (exclusive of 

private label): 

Dollal" 

Shal"e of 

NPPC 

CAT CHaI 

PURINA 0 N E 

FRISKIES 

CHEFS BLEND 

FANCY FEAST DRY 

KIT N KABOODLE 

KITTEN CHaI 

PURINA (Purina , Purina Veterinary Diets) 

PURINA PRO PLAN 

DELI CAT 

FRISKIES ALPO 

Meow Mix 

MEaI MIX 

MEOW MIX KITTEN 

ALLEY CAT 

P&G 

lAMS 

lAMS KITTEN 

EUKANUBA 

EUKANUBA KITTEN 

Hils 

HILLS SCIENCE DIET 

FELINE 

NATURE' S BEST 

NATURE' S BEST KITTEN 

ertoods 

WHISKAS 

Del Monte 

9 LIVES 

NATURES RECIPE 

PUSS N BOOTS CHOICE BLEND 

NUTRO MAX Data Source: IRI Consumer Panel Network 

NUTRO MAX CAT GOURMET CLASSICS Total US All Outlets 

NUTRO MAX KITTEN 

NUTRO NATURAL CHOICE 52 Weeks Ending 2/19/06 

Market share information for the relevant product markets is not available from supermarket scaner data 

because neither of the providers of that data, IR and Nielsen, include the other chanels of distribution in those data 

sets. By some estimates, the alternative distribution channels to supermarkets may represent as much as half of the 

pet food category sales. Thus, to provide market share information for this petition, we rely upon IRl Consumer 

Panel Network data, which represents data from across all outlets, including supermarkets, mass merchandisers 

(such as Wal-Mar), club stores (such as Costco), and pet specialty stores (such as PetSmart). TMMC believes IRl 

Consumer Panel Data Provides reliable market share information, and the company relies upon it in the normal 

course of its business. 
PUBLIC VERSION 

Out of 30 brands marketed curently, Meow Mix holds the fourh highest share and Del Monte 

9 Lives is eighth, which Nestle holding the first, second and fifth largest of all brands. 

By company, while Nestle maintans a dominant position, five other competitors would 

remain postmerger along with a substantial "others" category that is largely made up of private 

label sales:


DOLLAR HID 

COMPAN SHA Premerger Postmerger 

Nestle Purna 

Procter & Gamble 

The Meow Mix Company 

Hils 

Masterfoods (Mars) 

Del Monte 

Nutro 

Others (including private label) 

-- combined MM and DM (12. 8%) 

HHI delta 

Meow Mix curently has the third largest sales in the market, behind Nestle and Procter & 

Gamble. Post-merger, the combined Del Monte and TMMC will move up to second place. 

Even so, however, Nestle's share will continue to dwar all the other companes in the industr, 

stil more than three times the size of Del Monte/TMMC. 

HHI calculations in the "Others" category assume equal distribution of shares, at a level just below the 

next largest competitor. 
PUBLIC VERSION 

In the market for wet cat food, where Meow Mix holds only a small ( percent share), 

Nestle's dominance is even more strking, both by brands and by companes: 

Dollar 

Share of 

NPPC 

FANCY FEAST


FRISKIES ALPO 

FRISKIES 

PURINA (Purina , Purina cat 

Chaw Purina Veterinary Diets) 

PURINA PRO PLAN 

Meow Mix 

ALLEY CAT


MEOW MIX 

Del Monte 

9 LIVES 

NATURES RECIPE 

PUSS 8 BOOTS 

Masterfoods 

CESAR 

KAL KAN OPTIMUM


SHEBA 

WHISKAS Data Source: IRI Consumer Panel Network 

P&G Total US All Outlets 

EUKANUBA 52 Weeks Ending 2/19/06 lAMS 

lAMS WET POUCH 

DOLLAR HID Calculation 

COMPAN SHA Premerger Postmerger 

Nestle Purina 

Del Monte 

Masterfoods (Mars) 

P&G 

The Meow Mix Company 

Others (including private labeli 

-- combined MM and DM (15.7 %) 

delta 

HHI calculations in the "Others" category assume equal distribution of shares, at a level just below the next 

largest competitor. 
PUBLIC VERSION 

Meow Mix recently launched a cat treats product, which has only a percent share of 

the market. The change in HHI post-merger would be only , therefore. 

Dollal" 

Share of 

NPPC 

PURINA VVISKER LlCKINS 

FRISKIES 

PURINA AQUARI YUMS 

PURINA (Purina , Purina Essentials 

Purina Pro Plan) 

KITTY TEAZER 

Meow Mix 

MEON MIX TREATS 

Masterfoods 

VVISKAS TEMPTATIONS 

KAL KAN W'ISKAS UL TRAMILK 

Del Monte 

POUNCE TREATS 

9 LIVES TREATS (9 Lives cat Data Source: IRI Consumer Panel Network 

Nippers , 9 Lives Meaty Morsels) Total US All Outlets 

NATURES RECIPE 52 Weeks Ending 2/19/06 

In addition to this market share information, and consistent with it, pricing and other 

market conditions show that the Meow Mix and Del Monte cat food brands are not considered 

close substitutes for one another. Meow Mix s dry cat food makes up the majority of its business 

while its wet food and snacks are relatively small. Del Monte s product mix is the reverse. In 

dry cat food, Nestle Purna brands Friskies and Cat Chow, among others, are considered more 

signficant competitors to 9 Lives than is Meow Mix, and vice versa. Alley Cat is a lower-priced 

value" brand than is 9 Lives. In wet cat food, Meow Mix offers "super premium" 3.3-ounce 

cans, a segment dominated by Nestle Purna s Fancy Feast in which 9 Lives does not compete 

signficantly. Thus, by combining largely complementar brands, the transaction wil enhance 

not har, competition. 
PUBLIC VERSION 

The Sale of TMMC to Del Monte Is Consistent 

With The Purpose of the 
 Commission s Order 

Del Monte s proposed acquisition ofTMMC will appropriately continue to check the 

har that the Commission alleged would otherwise result from the merger of Nestle and Ralston. 

According to the complaint, without the required divestitue, the combined NestlelRalston 

company would have held approximately percent of the dr cat food market, and the merger 

would have raised the HHI level by more than points to above , raising the specter of 

both unlateral and coordinated competitive effects. (Nestle S. A. Ralston Purna Co., Dkt. No. 

4028, Analysis to Aid Public Comment and complaint at -, 17). 

Neither Cypress nor Del Monte can provide detailed information about the competitive 

har that the Commission foresaw in the NestlelRalston merger because neither is privy to the 

confidential information considered by the Commission or its legal and economic analyses. Del 

Monte became a paricipant in the cat food market only after the Commission s Order, through 

its acquisition of Heinz pet food products in December 2002. Even with only general market 

information, however, it is apparent that Del Monte, with its curent product portfolio and 

demonstrated experience of today, better fits the profile of a desirable buyer, from the FTC's 

perspective, than did either J.W. Childs or Cypress. Indeed, when Nestle proposed that J. 

Childs be allowed to acquire the divestitue package, Commssioner Thompson expressed some 

reservation about the deal, pointing out that the Commission had been "presented with a buyer 

that does not have a record of experience in the market in question, (and) therefore historical 

indicia of market competitiveness were not available for the Commission s review." (Nestle 
, 

PUBLIC VERSION 

A. Ralston Purna Co., Dkt. No. C-4028, concurrng Statement of Commissioner Mozelle W. 

Thompson. ) 

In addition, Commssioner Anthony expressed concern that "investment firms may have 

quite different incentives and goals in operating a business, " as an investment fi's "business 

plan often involves selling the acquired business within a relatively short period of time. 

(Nestle S.A. Ralston Purna Co., Dkt. No. C-4028, statement of Commissioner Sheila F. 

Anthony.) She went on to explain that I would prefer to see divested assets go to a company 

with a stronger likelihood of operating the business for the long term." Del Monte has no curent 

plans to sell the acquired business, and intends to operate it for the long term, applying its 

expertise in varous pet food markets to continue to develop the acquired brands. Del Monte is 

thus a strong fit with the FTC' s considerations. 
PUBLIC VERSION


Conclusion 

Together with Del Monte s brands, Meow Mix and Alley Cat products wil be able to 

continue their impressive growth. Because the transaction brings together complementar 

branded products under the umbrella of a proven corporate entity, and therefore generates 

substantial synergies and cost savings, the brands are likely to perform even more robustly than 

otherwise would be possible. Market shares and the number of competitors in each relevant 

market, among other factors, show that the transaction would not be likely to raise 

anticompetitive concerns, and is in fact pro competitive. For the foregoing reasons, therefore 

Cypress respectfully requests that the Commission approve the proposed sale ofTMMC as soon 

as practicable after expiration of the public comment period. 

Respectfully submitted 

7d" 

Claudia R. Higgis 

Kaye Scholer LLP 

Counsel for The Cypress Group