Kraft Inc., target of an $11-billion takeover bid, fired off a terse letter to the chairman of Philip Morris Cos. Thursday rejecting a request for negotiations.
The letter disclosed that Kraft Chairman John M. Richman crossed paths with Philip Morris Chairman Hamish Maxwell a few days before the business world was stunned by Monday’s cash bid.
“You did not see fit to discuss your takeover attempt when we were together at the Grocery Manufacturers of America meeting last Wednesday and Thursday,” Richman wrote.
“Nor did you see fit to tell me that you were planning on filing a bizarre and baseless lawsuit against me and our board of directors Monday,” he said.
“You must have been planning your takeover bid for a long time. We intend to take our time and study the situation very carefully. We have a fiduciary duty to our shareholders and an obligation to our employees, customers, suppliers and communities to do so.”
New York-based Philip Morris’ $90-a-share offer would give it control of a company that has a 25% stake of the U.S. market for natural cheese and 60% of the processed cheese market.
Maxwell said Thursday that Philip Morris had 64 banks lined up to finance the deal.
“Our cash offer is a generous one,” Maxwell said.
Buying Kraft would make Philip Morris the king of supermarket aisles, with products ranging from Miller Lite beer and Jell-O to such non-Kraft brands as Miracle Whip, Sealtest and Breyer’s ice cream, Celestial Seasonings tea and Lender’s bagels.
Philip Morris, whose main businesses are brewing, tobacco and food, has filed a lawsuit in U.S. District Court in Chicago challenging Kraft’s first line of defense, a “poison pill” that kicks in when an unwanted suitor acquires 20% of Kraft stock.
In that event, Kraft would double the number of shares, making a buyout expensive.
Analysts, however, believe that poison pill challenges are standard procedure and they doubt a battle for Kraft would turn on a court case.
In an unrelated matter, Kraft said it signed a letter to acquire Mueller Food Service Corp., based in Menomonee Falls, Wis. Terms of the deal were not disclosed, but Mueller had sales of $60 million in its 1987 fiscal year.