Quaker Offers $65 a Share for Anderson, Clayton

Quaker Oats Co. late Friday escalated its campaign to acquire Anderson, Clayton & Co., filing an antitrust suit against Ralston Purina Co., which was deciding whether to launch a rival bid for the pet food maker.

The suit was filed in U.S. District Court in Washington only hours after Quaker, which holds at least 23.4% of Anderson, Clayton’s stock, offered to buy the rest of the stock for at least $65 a share.

Ralston said last week that it planned to offer $62 a share for Anderson, Clayton provided Ralston’s board endorsed the move at its meeting Friday. The meeting lasted for several hours, but the board had no comment afterwards, according to spokesman Elmer Richars.

Quaker’s suit contended that if Ralston acquired Anderson, Clayton, it would substantially lessen competition in the pet food industry and would eliminate Quaker as an effective competitor to Ralston, according to Quaker spokesman Ron Bottrell in Chicago.

Ralston Market Share

Quaker also said that if Ralston acquired Anderson, Clayton, Ralston’s pet food market share would be as big as the share of its five largest competitors combined.

Ralston and Quaker are attracted to Houston-based Anderson, Clayton because of its Gaines Foods pet food unit.

“Even though a formal offer hasn’t yet appeared, we expect one to appear,” Bottrell said.

Ralston officials would not comment on the suit because they had not seen it yet, Richars said.

Ralston is the nation’s biggest pet food company, and the acquisition of Gaines would lift its share of the $5.4-billion market to about 34% from 27%.

Quaker, meanwhile, would jump to second place among pet food makers, behind Ralston because the Gaines purchase would raise its market share to 14% from 7%.

Chicago-based Quaker said it sent a letter to Anderson, Clayton offering at least $65 a share in a friendly deal and indicated that it might raise the price if Anderson, Clayton would give it the same financial data that it already had given to Ralston.

23.4% Stake

Quaker’s proposal came one day after it bought 2.87 million, or 23.4%, of Anderson, Clayton’s 12.2 million common shares outstanding for $64 a share.

In reporting the stake to the Securities and Exchange Commission, Quaker also disclosed a letter sent Thursday to Anderson, Clayton saying that it would pay at least $64 a share for the remaining stock.

But in an apparent response to the rapid climb in Anderson, Clayton’s stock price, Quaker sent a second letter to Anderson, Clayton offering to pay at least $65 a share.

At $65 a share, it would cost Quaker $606.5 million to buy the remaining stock.

News that Quaker had bought 23.4% of Anderson Clayton’s stock sent the price of the shares soaring $4.50 to $70 a share, increasing the pressure on Ralston to respond with a sweetened proposal and perhaps sparking a renewed bidding war for the company.