NEW YORK (CNNfn) - Nabisco Group Holdings' stock retreated slightly Wednesday as deal hungry investors awaited word on the latest round of bidding from companies hoping to purchase all or part of the U.S. snack and cookie king.|
Shares in Parsippany, N.J.-based Nabisco (NGH: Research, Estimates) fell 5/8 to 24-15/16 on below-average volume in mid-afternoon trading, as speculation swirled around Wall Street about the fate of the company and its only subsidiary, Nabisco Holdings Corp.
Nabisco officials declined to comment. Sources familiar with the situation said the maker of Oreo cookies and Ritz crackers is still not operating under a firm deadline to complete a deal. Final bids were due to Nabisco's investment bankers by the end of the day Wednesday, sources said.
Analysts interviewed Wednesday still believed tobacco and food conglomerate Phillip Morris would emerge as the likely buyer of Nabisco Holdings Corp. (NA: Research, Estimates), given Phillip Morris' deep pockets and the synergies that could be obtained by combining the food company with its General Foods and Kraft product lines.
That would leave the cash-filled Nabisco Group Holdings shell to be acquired by another entity, most likely a tobacco concern like R.J. Reynolds Tobacco Holdings (RJR: Research, Estimates) that could absorb whatever litigation exposure Nabisco still held related to the hundreds of cases filed against the industry across the country.
Philip Morris (MO: Research, Estimates) has thus far declined to comment on a possible Nabisco bid, but Martin Feldman, a tobacco analyst with Salomon Smith Barney, said the New York-based company, currently the world's top ranked cigarette maker and No. 2 food company, is still the odds-on favorite to add Nabisco's valuable holdings.
He also noted that Phillip Morris recently stopped buying stock for its share repurchase program, something it generally only does in advance of its earnings reports or if it is receipt of non-public information.
"They certainly represent the most logical buyer of the food subsidiary," he said, projecting Nabisco Holdings will ultimately be sold for between $58 and $62 per share, or between $15.5 billion and $16 billion. The parent company, Nabisco Group Holdings, would then be sold for between $30 and $31 per share per share, or roughly $16.4 billion.
That price level would represent a roughly 13 percent premium for Nabisco Holdings based on its closing price Tuesday, but signify a more than 85 percent premium above the company's closing price of 32-3/8 on April 4, the day before Nabisco made public an unsolicited takeover bid for the company from financier Carl Icahn.
But there are several other possible scenarios and bidders.
British soft drink and confectionary maker Cadbury Schweppes has confirmed its interest in all or part of Nabisco, as has French food group Danone, which covets Nabisco's cookie business. Recent press reports have speculated that those two parties were mulling a joint $15 billion bid and dividing Nabisco's businesses between them.
Speculation arose last week that Swiss food conglomerate Nestle SA, intrigued with Nabisco's confectionary and pet food products, was considering a bid of its own.
Not be forgotten, financier Carl Icahn, who originally forced Nabisco onto the selling block with an unsolicited $16-per-share bid in April to purchase the remaining company shares he didn't already own, is also still in the running, according to sources.
Romitha Mally, a Goldman Sachs food analyst, said Nabisco's major brand names, like Oreo, Chips Ahoy!, Planters, and Milk-Bone, should help the company garner top dollar for its properties.
The Nabisco bidding heats up just weeks after Anglo-Dutch consumer goods conglomerate Unilever PLC purchased Bestfoods for $20.3 billion, sparking what many analysts believe will be a wave of consolidation among food manufacturing.