Morris, Cadbury make $ 14.57 bn bid for Nabisco

JUNE 22: Philip Morris Cos Inc and a joint venture of Danone SA and Cadbury Schweppes Plc have submitted final bids for all of Nabisco Hol...

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JUNE 22: Philip Morris Cos Inc and a joint venture of Danone SA and Cadbury Schweppes Plc have submitted final bids for all of Nabisco Holdings Corp that could reach nearly $55 a share, or $ 14.57 billion, the Wall Street Journal reported on Thursday.

The newspaper, citing people familiar with the matter, said Philip Morris, owner of Kraft Foods, had bid less than $55 a share, while the venture of Danone and Cadbury, two European food concerns, was preparing a bid of about $50 a share because of a limited ability to realise cost savings from any merger.

Financier Carl Icahn on Wednesday submitted a bid for the holding company Nabisco Group Holdings Corp, offering $19 a share, plus a two-year, $9-a-share note, according to a person with knowledge of the matter, the Wall Street Journal said.

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Icahn is financing his bid with his own money and expected financing from Industrial Bank of Japan, the Wall Street Journal reported. Icahn’s main rival for the holding company is RJ Reynolds Tobacco Holdings Inc, the Winston-Salem, NC, tobacco company that was spun off last year by the holding company, the newspaper said.

The Journal said that unlike Icahn’s bid, Reynolds submitted a bid that was contingent upon the food company being sold. Its bid is priced at about a 20 percent discount to the net proceeds received by Nabisco Group from the sale of the food unit, the Wall Street Journal said.

Each Nabisco Holding share is roughly equivalent to 0.655 Nabisco share, the article said. Under this scenario, should the food company fetch $60 a share, Reynolds would offer to buy the holding company, which will simply be a cash-filled shell, for about $30 a share, the Wall Street Journal said.

For the food unit, Nestle SA, which has been viewed as a wild card, is considered unlikely to bid for the entire company, according to a person familiar with the matter, the newspaper said.

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However, the Swiss food company may be playing its cards close to its vest, the article said. Similarly, HJ Heinz Co, of Pittsburgh, contrary to some reports, did not make a bid to buy all of Nabisco, though it had wanted to team with Danone for a joint bid, the Journal said.

Nestle, Heinz and other companies have informed Nabisco they want to buy individual assets, should Nabisco choose to sell any assets, or, as is more likely, the winning bidder wants to dispose of some assets, the article said. Nabisco and Danone declined comment, the newspaper said.

A Cadbury spokeswoman in London reiterated that the beverage and confectionery concern is interested in parts of Nabisco, but declined to comment further, the newspaper said.