(Reuters) - Procter & Gamble Co is selling the bulk of its pet food business to Mars Inc for $2.9 billion to focus more on its personal care and cleaning brands, the companies said on Wednesday.

In an all-cash deal, privately held Mars will buy the Iams brand, as well as Eukanuba and Natura, in the Americas and other selected countries, which account for 80 percent of P&G Pet Care's global sales.

P&G is seeking other buyers for those brands in European Union markets, which were excluded from this deal.

Mars products range from candy like Mars bars and M&M's to food like Uncle Ben's rice and chewing gum Extra and Orbit. Its pet care brands already include Pedigree, Whiska, and Royal Canin, and this deal will boost its market share as it vies with Nestle SA in the pet food market.

Euromonitor International projects the global pet care industry will hit $76.8 billion in sales in 2014.

P&G products include Tide detergent, Gillette razors and Pampers diapers. The company has been under pressure to streamline its business from investors including activist investor William A. Ackman, who took a stake in P&G in 2012.

"Let's be honest. Pet food hasn't moved the needle for P&G," said Matt McCormick, a portfolio manager atCincinnati-based Bahl & Gaynor Investment Counsel, which owns about 4.2 million P&G shares. "I think P&G needs to shrink to grow," he said.

P&G has undertaken a multi-year restructuring program, cutting thousands of jobs and taking steps to streamline operations, launch new products and expand into fast-growing emerging markets. The exit from pet food was "an important step" toward focusing on core businesses, Chief Executive Officer A.G. Lafley said in a statement.

According to Euromonitor, P&G had just 4.7 percent of the global pet care market in 2012, the last year for which data was available. Mars had 23.4 percent of the global pet care market, putting it in a virtual dead heat with Nestle SA, maker of Purina, with a market share of 23.1 percent.

Sanford Bernstein analyst Ali Dibadj praised P&G's exit from pet food, which he called a "big distraction" that generates only about 2 percent of company sales, or an estimated $1.6 billion a year.

P&G does not break out results for its pet care business, which are accounted for in its larger health-care segment. But P&G's regulatory filings show the pet care volume decreased in the year ended in June 2013 because of competition and product recalls for Natura.

The companies expect the transaction to close in the second half of 2014.

P&G said it did not expect the deal to hurt its forecast for core earnings growth per share for 2014 or have a material impact on 2015 results.

Mars, controlled by the Mars family, had annual sales of more than $33 billion in 2013 and was ranked 5th in Forbes' list of America's largest private companies.

Law firm Jones Day represented P&G in the deal, while Mars was represented by Skadden Arps.

P&G shares were up 3 cents at $81.38 in afternoon trading on the New York Stock Exchange.

Mars Nestle