Unilever making bid for Bestfoods

European company recently purchased Ben & Jerry's, SlimFast

Food Industry

May 03, 2000|By BLOOMBERG NEWS

ENGLEWOOD CLIFFS. N.J. -Unilever NV, the world's second-largest food company, has offered to buy Bestfoods for $18.3 billion in cash, an unsolicited bid that the U.S. food company rejected as inadequate.

Bestfoods, maker of Hellmann's dressings and Skippy peanut butter, said Unilever offered $66 a share yesterday and in April bid $61 to $64. Unilever, a British-Dutch company that makes Lipton teas and Q-Tip swabs, couldn't be reached for comment.

Unilever has been buying well-known brands it can market world-wide, spending $2.6 billion last month for SlimFast diet foods and Ben & Jerry's ice creams. While Bestfoods has long said it prefers to remain independent, the offer could force it to seek a sweeter bid from Unilever or find other partners, analysts said.

"The board clearly had to consider the offer," said analyst John O'Neil at PaineWebber Inc., who rates Bestfoods "attractive."

The offer, disclosed late today, is 31 percent more than Bestfoods' price of $50.5 625 yesterday and exceeds its peak of $60.875 in July 1998. Unilever rose 18.75 cents yesterday to $45.4375 in New York.

Bestfoods, based in Englewood Cliffs, N.J., has about $2.5 billion in debt, O'Neil said.

Bestfoods' well-known brands - which include Knorr soups, Entenmann's baked goods and Mueller's pastas - and its International distribution network make it one of the most attractive targets in the U.S. food industry, analysts said.

The company had held talks with H.J. Heinz & Co., the Wall Street Journal reported in September.

"They have some of the better fundamentals in the food group right now, and that puts them in a good (bargaining) position," said Lehman Brothers Inc. analyst Andrew Lazar, who rates Bestfoods "outperform."

While sales gains for U.S. food makers have slowed to about 1 percent a year, Bestfoods' international presence will help boost sales to about 5 percent to 6 percent this year.

Unilever had sales last year of $43.7 billion from products such as Ragu sauces, Wish-Bone dressings, Dove soap, Vaseline salve and Sure deodorant.

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