Kellogg Co. among the latest rumored Keebler suitors
The latest gossip over who will acquire Keebler Foods points to Kellogg Co., for whom Keebler currently manufactures Pop-Tarts and Nutri-Grain bar brands. Some Wall Street-watchers have also suggested that Campbell Soup Co., Groupe Danone SA and PepsiCo Inc. could also be potential bidders.
The news follows Flowers Industries' recent announcement that it was putting its 55% majority stake in the Elmhurst, IL-based cookie and snack maker (see related article, Flowers, Keebler Shares Skyrocket 30% on Selloff News). Flowers seeks a selloff in order to cover its debt, while Keebler execs stand to make a windfall from a sale, as well.
The latest Kellogg buyout buzz also follow the rumor—and "soft" denial—in recent days that Cadbury Schweppes Plc was interested in acquiring the company whose legendary "elves in a hollow tree" will soon report to a new corporate parent. (See related article, Cadbury rumored to be Keebler suitor).
Keebler could sell for an estimated US$5.5 billion, but a bidding war could drive the price up.
General financial media reports included a comment by a PaineWebber Inc. analyst saying it would be no surprise if Kellogg were to join in the bidding.
Earlier this year, merger talks between Kellogg and Quaker Oats did not produce results. The Battle Creek, MI-based Kellogg still may seek to branch out from its core ready-to-eat cereal business, which represents 75% of its sales.
According to a story dated August 2 from The Daily Deal.com, Groupe Danone SA, Philip Morris and Campbell Soup are potential bidders. Danone is the world's largest cookie-maker and is seeking a larger U.S. presence—and lost its takeover bid for Nabisco to Philip Morris. (See related article, Philip Morris Acquires Nabisco for $55 Per Share ). Campbell Soup may use a Keebler acquisition to add to its Pepperidge Farm division—if it keeps Pepperidge. Likewise, PepsiCo. could seek to expand on its Frito-Lay business.
Morgan Stanley Dean Witter & Co. and UBS Warburg llc, both investment bankers working for Keebler, reportedly sent Keebler's books to potential first-round bidders last week.
Edited by Bob Sperber