General Foods OKs $5.7-Billion Takeover Offer by Philip Morris : Deal Would Be Largest Non-Oil Corporate Sale

General Foods Corp. said today that it has agreed to be taken over by Philip Morris Cos. Inc. for about $5.7 billion in what would be the largest non-oil acquisition in corporate history.

Philip Morris’ acquisition of General Foods also would create the nation’s largest consumer products company.

Under the agreement, Philip Morris is to acquire all of General Foods’ 47.3 million shares outstanding at $120 a share in cash.

The merger is subject to the approval of both boards of directors, the companies said. Board meetings are scheduled for Monday.

Approval Likely

Hamish Maxwell, chairman and chief executive officer of Philip Morris, and James L. Ferguson, who holds the same title at General Foods, said they would strongly recommend that their boards approve the merger and they indicated that approval was likely.

The tender offer is to begin Monday and expire Oct. 28.

General Foods, which makes such products as Jell-O, Kool-Aid, Post cereals and Maxwell House coffee, would operate as a separate company within the Philip Morris empire and maintain its headquarters in Rye Brook, N.Y., the companies said.

Five seats on the board of Philip Morris will be offered to General Foods, and Ferguson will be nominated as vice chairman of Philip Morris.

Early this morning, General Foods and Philip Morris separately asked the New York Stock Exchange that trading in their stocks be suspended pending announcements.

Closed by Hurricane

The trading halt proved irrelevant, however, because the New York Stock Exchange decided not to open because of Hurricane Gloria.

But General Foods’ stock rose $6.25 to $117 as 28,200 shares traded hands on the Midwest Exchange before that exchange also was closed.

After General Foods announced Tuesday that it was considering a merger offer from an unnamed firm, its stock soared $16.62 1/2 a share to close at $101.50. It rose $5.25 more on Wednesday and a further $3.50 Thursday to $110.25 in composite New York Stock Exchange trading.

Philip Morris closed at $75.87 1/2, down $1, in composite trading Thursday.

Primarily Tobacco

Philip Morris, which also owns Seven-Up Co. and Miller Brewing Co., had 1984 sales of $10.14 billion. Tobacco represents 90% of its business. Its cigarette brands include Marlboro, Benson & Hedges, Parliament and Virginia Slims.

General Foods had sales of $9.02 billion last year.

General Foods, which began as Postum Cereal Co. in Battle Creek, Mich., in 1895, has about 56,000 employees in 20 countries.

In recent years, it underwent a major restructuring to make itself more dynamic. It bought the Oscar Mayer processed meats company in 1981, the Entenmann’s baking concern in 1982, the western division of Oroweat foods in 1983 and the Ronzoni pasta products company in 1984.

It also sold its Burger Chef restaurant chain and Gaines pet foods operation.