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Bestfoods to mull $20B bid
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June 5, 2000: 4:59 p.m. ET
Food company to mull sweetened bid from Unilever, say sources
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NEW YORK (CNNfn) - Bestfoods' board of directors is set to convene late Monday afternoon to discuss a sweetened $20 billion takeover bid from Anglo-Dutch rival Unilever, according to sources familiar with the situation.
Sources said Bestfoods' (BFO: Research, Estimates) board was slated to meet at 5 p.m. ET, Monday to consider a new buyout offer from Unilever that values the Englewood, N.J.-based company at between $72 and $73 per share.
The meeting will mark the first time Bestfoods' board has met to consider a proposal from Unilever since rejecting the company's $66 per share offer last month.
Since then, Bestfoods has discussed possible merger situations with several companies, including U.K. food and drink company Diageo and the troubled Campbell Soup Co.
New reports Monday suggested that negotiations between the diversified U.S. food company and Campbell Soup had grown serious. The Wall Street Journal, citing people familiar with the matter, reported that Bestfoods was in intensive talks to buy the company, which has seen its stock price hit recently amid falling earnings and questions about the strength of its food business.
But analysts largely discounted those reports as a smoke-and-mirrors tactic employed by Bestfoods management to extract a higher bid.
"It's just a straw man that Bestfoods has created to get Unilever to raise their bid," said William Leach, an analyst with Donaldson, Lufkin & Jenrette.
"You might hypothetically buy Campbell's as a merger of equals if you could do it debt free, but to do that deal, they'd have to pay mostly cash . . . which would dilute earnings, deplete cash reserves and make the stock trade at 45 the next day. You tell me if that sounds like a good deal," he said.
 Bestfoods shareholders were clearly hedging their bets, though. The company's stock retreated most of the day Monday, closing down 2-1/8 at 63 on higher-than-average volume of more than six million shares.
Officials at Unilever, Campbell and Bestfoods all declined to comment on the reports Monday.
Shares of Campbell (CPB: Research, Estimates) have fallen by about one-third in the past year, and analysts have questioned the strength of its main soup business. The company's market value is now about $12.6 billion.
Since its shareholders would likely reject a merger given that Unilever has already placed $18.3 million on the table, Bestfoods management would have to use cash and preferred stock to acquire the beleaguered Campbell, thereby bypassing the shareholder approval process.
Word first emerged last week that Unilever had raised its takeover offer for Bestfoods to more than $70 per share, hoping to spur negotiations that never really started after the company's initial offer.
Unilever's management repeatedly has expressed its desire to remain patient with the Bestfoods negotiations, not wanting to raise its offer too much in the absence of another bidder.
But reports of Bestfoods' talks with Campbell have significantly increased the pressure on Unilever (UN: Research, Estimates) to complete a deal. 
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