Danone of France confirmed yesterday that it is in preliminary talks about buying Nabisco Group Holdings, while Cadbury Schweppes was also tipped as to be among an array of food industry businesses also considering acquisitions.
Speculation over Nabisco has soared since it put itself up for sale in March after one of its largest shareholders, Wall Street financier Carl Icahn, signalled his plans to make an offer for the group. Yesterday was the deadline for bids for Nabisco, which could fetch £12bn.
Nabisco is believed to have signed confidentiality agreements with 13 companies which have approached it about possible purchase deals. They are thought to include Philip Morris, which would be interested in buying Nabisco Holdings, the food portion of the empire.
With its Kraft Foods division, Philip Morris is already a huge player in the food industry and is thought to be best placed to make the acquisition. If it buys Nabisco foods, Philip Morris might be tempted to spin off its tobacco businesses, which include the Marlboro brand.
In a report yesterday, the Wall Street Journal identified Cadbury Schweppes as a possible bidder for the non-biscuit interests of Nabisco Holdings. Cadbury refused to comment yesterday, but analysts said Cadbury and Danone could be considering a joint bid. Danone shares fell 2.2 euros to 265.6 euros yesterday. Cadbury shares closed down 1.5p at 445.5p.
"We're at the stage of studying the dossier and holding preliminary discussions," said a spokeswoman for Danone, already the world's largest biscuit maker.
While Nabisco is most famous for Ritz crackers and Oreos, it also makes and markets a range of other food products, including fruit juices, sweets and canned fruit and vegetables. Nabisco Group Holdings had $8.3bn (£5.5bn) sales in 1999.
In an ironic twist, RJ Reynolds is reportedly also interested in buying Nabisco Group Holdings. The maker of cigarettes such as Camel was spun off by Nabisco Group Holdings last year because of the problem of tobacco litigation.
Nabisco continued to decline all detailed comment on what appears to be a widening web of negotiations. "The process is moving forward," said Hank Sandbach, Nabisco spokesman. A final sale - or collection of deals - is expected in June or July, and analysts predict a new wave of consolidation in the food industry could soon follow. The sector is already seeing a battle for Bestfoods of the US.Reuse content