Pillsbury Hints It Will Bargain If Grand Met Sweetens Offer
Pillsbury Co. on Wednesday continued to attack a $60-a-share takeover offer by Grand Metropolitan as inadequate, but it suggested that a sweetened bid from the British conglomerate might finally draw it to the negotiating table.
The move comes after an attorney representing Pillsbury shareholders says the company failed to persuade 15 potential buyers to make an offer for the food company.
In a letter to Grand Met Chairman Allen Sheppard, Pillsbury Chairman Philip L. Smith said: “The Pillsbury board continues to be willing to seriously consider any bona fide offer, but it will not endorse an offer which does not reflect the values inherent in the company.”
Johnson added that it has rejected Grand Met’s existing bid as “financially inadequate” in light of its own analysis and “by the advice of your advisers who have put values in the high $60s to low $70s on Pillsbury in documents that were disclosed publicly in open court by your counsel.”
In response, Sheppard defended Grand Met’s $5.23-billion offer in his own letter sent to Pillsbury board members. In the letter, Sheppard said that Pillsbury’s own financial advisers have “valued Pillsbury in the $50s.” He once again called for a meeting with Smith and asked the company to withdraw its so-called “poison pill” anti-takeover defense.
Analysts were skeptical of Pillsbury’s letter.
“Pillsbury has yet to show its cards,” said Stephen Carnes, an industry analysts at Piper Jaffray & Hopwood, a Minneapolis brokerage firm. “Pillsbury has not come back yet and said ‘We’re worth this amount.’ They’re just backpedaling.”
Pillsbury released the contents of Johnson’s letter one day after an attorney representing Pillsbury shareholders said the Minneapolis-based company had approached 15 potential buyers about making a friendly offer. But none of the 15 contacted would make a bid, according to attorney Karl Cambronne.
Cambronne made the comments during a Minneapolis court hearing during which Pillsbury investors renewed efforts to force the company to revoke its poison pill and negotiate with Grand Met. The poison pill would make a takeover of Pillsbury much more costly by increasing the number of shares that would have to be acquired. Grand Met’s nearly 2-month-old offer is conditioned on Pillsbury withdrawing the pill.
In composite trading Wednesday on the New York Stock Exchange, Pillsbury shares rose $1.375 to close at $59.25. The stock was the eighth most active issue on the NYSE, with about 1.28 million shares changing hands.
