...As Nestle Drools Over Cpcby
There's speculation these days about food companies not only as takeover targets but also as would-be acquisitors. One such is Switzerland's Nestle, the world's largest food processor. The question Wall Streeters are asking is: "What will cash-rich Nestle go after?"
The maker of dairy products, coffee, chocolate, pet food, mineral water, and pharmaceuticals is said to be hot after CPC International. Whispers are that talks have been going on between Nestle and CPC, an Englewood Cliffs (N.J.) maker of grocery products, corn syrup, and dextrose with operations in 58 countries. One source says negotiations are way past the exploratory stage. He believes an initial pact could be ironed out by late September or October.
CPC is trading at 49, up from 44 in mid-May. An investor familiar with the negotiations says the price CPC is seeking is between $70 and $80 a share.
Nestle is eager, he adds, to broaden its operations not only in the U.S. but also in Europe and Latin America, where CPC sales are expected to hit $1 billion this year. Britain, France, and Germany are also big CPC markets. The company's foreign operations accounted for more than 64% of sales and profits last year.
Among CPC'S products are Knorr soup, Hellmann's and Best Foods mayonnaise, Skippy peanut butter, Mazola corn oil and margarine, Golden Griddle pancake syrup, Karo syrup, and Thomas' and Arnold baked goods.
Analyst Kenneth Shea of Standard & Poor's figures earnings per share will jump to $3.20 this year and $3.60 next year, up from last year's $2.95. Sales are expected to hit $7.2 billion this year, after last year's $6.7 billion. Nestle and CPC both declined comment.