Bestfoods edges closer to talks with Unilever

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The Independent Online

The board of Bestfoods, the Hellmann's mayonnaise and Marmite maker, is understood to have softened its stance on a potential takeover by Unilever, the Oxo to Persil company, as the US group's key shareholders yesterday urged it to hold talks with its Anglo-Dutch suitor.

David Nelson, an analyst at Credit Suisse First Boston in New York, said that he had met with Bestfood executives, who indicated they would be open to a deal with Unilever. In a research note to clients, Mr Nelson said: "We have spoken with the Bestfoods management which, after careful analysis, now sees the potential for $1bn (£654m) in annualised synergies from a combination with Unilever.

"Bestfoods considers this match with Unilever to have the highest level of synergies as any other in the industry ... and that their shareholders deserve a commensurate share of the savings."

But Gale Griffin, Bestfoods' spokeswoman, said the comments should "in no way" be taken as a sign that the company would accept Unilever's £18.4bn, or $66-a-share, approach. She said: "We talk to analysts all the time and when we do, we talk about industry issues.... Nothing has changed. Our board has determined [Unilever's proposal] to be financially inadequate. Our position continues to be that we want to do the best for our shareholders that we can and that offer doesn't represent the best." Responding to Mr Nelson's suggestion that "the deal will go through, but at a higher price, perhaps near $75", she said: "That is his number."

Meanwhile, Bestfoods shareholders yesterday condemned the company's rejection of Unilever's approach last week and said they were unhappy that the group's board had refused Unilever's request for face-to-face talks.

Melvin Petersen, head of investment at McMorgan & Co, which owns 1.371 million of Bestfoods' 276.87 million shares, said: "It seems like $66 a share or higher is certainly food for thought.... I think they should reconsider Unilever's offer and not reject it out of hand."

One fund manager, whose company has a small stake in Bestfoods, said: "Whenever a company has an approach, it's always got to be worth talking. Not to do so is just clearly completely unconstructive."

A spokesman for Unilever, which is due to report its first-quarter earnings today, said: "We have said right the way down the line that what we want more than anything is to sit down with Bestfoods and talk with them. And we welcome any initiative to promote this. We hope that they will move from talking with analysts to talking with us around the table." He confirmed that the two groups had held a telephone conversation "at the highest level" on Monday night but said that Unilever was still "patiently awaiting" a face-to-face meeting.

Heinz, which was said to have approached Bestfoods last week to try to broker a merger, yesterday declined to comment.

Unilever shares closed up 8p at 383.5p.

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