Philip Morris bids $450 million for Nabisco's cereal business

November 17, 1992|By New York Times News Service

Philip Morris Cos. said yesterday that it planned to acquire RJR Nabisco's North American cold-cereal business for $450 million.

With its cash bid, which some analysts had predicted, Philip Morris hopes to catch the Nabisco division on the rebound from a planned sale to General Mills for the same price. That deal was scrapped two weeks ago because of concern over possible regulatory hurdles.

The most recent proposal stands a better chance of winning regulatory approval, analysts said, because the combined divisions would still fall short of the two industry leaders, General Mills and Kellogg, limiting the potential qualms of regulators.

The Post unit of Philip Morris' Kraft General Foods division has 11.7 percent of the $8 billion-a-year ready-to-eat cereal business in the United States, and Nabisco has 2.8 percent.

But because of the increasing concentration in the cereal business, the deal will be scrutinized by the Federal Trade Commission, whose approval is required, as well as by regulators in Canada.

"There is some doubt whether any cereal company can buy another cereal company," said John M. McMillin, a food and tobacco industry analyst with Prudential Securities.

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