It Looks Like Three Easy Pieces

Some pros who made a killing with Pet in January, when Grand Metropolitan announced it would acquire the worldwide food producer, have switched their attention to Whitman (WH), a diversified holding company that spun off Pet in 1991. They're convinced Whitman, whose stock has been stuck in the 16 to 18 range for the past 12 months, will be the next buyout winner.

Whitman is in three businesses analysts believe are worth more than what the stock is selling for: Its Pepsi-Cola General Bottler unit produces and distributes soft drinks; the Midas International division provides auto replacement parts and services; and its Hussmann unit makes refrigeration equipment for food-service companies.

Investment manager Mark Boyar, who scouts for companies with assets selling at a substantial discount to estimated intrinsic value, figures Whitman's three units combined are worth 30 a share. He suspects that a number of investors, including Kohlberg Kravis Roberts, may be looking at Whitman. KKR declined comment.

"These smart and clever operators have the resources and skills to acquire Whitman at its currently depressed price of 16 and then sell off the pieces at much higher prices," says Boyar. Whitman posted sales of $2.6 billion last year and earned $1 a share. This year, Boyar sees the company earning $1.30. Calls to Whitman weren't returned.

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