Scott Paper Shares Jump on Rumors of New Suitors

Scott Paper Co. shares rose sharply Thursday on rumors that either Procter & Gamble Co. or the British firm Unilever may bid for the paper products company, traders said.

Last week, Scott was reported to be in merger talks with Kimberly-Clark Corp. in a stock transaction valued at about $7.3 billion.

“There’s talk that a couple of other suitors may step in. We’re hearing Unilever or P&G;,” one trader said after Scott’s stock rose $2 to $50.125 in active trading on the New York Stock Exchange.

Scott’s stock later eased somewhat, closing at $49.875, up $1.375. That was still above the $46.875 at which it traded before the Kimberly-Clark report.

None of the companies would comment on the latest rumors.

The Wall Street Journal reported last Friday that Kimberly-Clark and Scott Paper were discussing a tax-free stock transaction, with Scott’s shareholders receiving Kimberly-Clark stock of equal value.

Analysts said such a merger would combine the two companies’ strengths in different product lines and create a formidable consumer-products giant with $11 billion in annual sales.

Scott is strong in bathroom tissue and paper towels, especially in Europe. On the other hand, Kimberly-Clark has Huggies diapers, Kotex feminine napkins and Kleenex facial tissue, but has had difficulty expanding in Europe.

A spokesman for Unilever in London declined to comment. The company has divested its paper and packaging interests over the past decade.

Scott’s share price doubled last year and is up more than 28% so far this year, apparently on investor belief that Chairman Albert Dunlap has been positioning the Philadelphia-based company to be acquired.

In a little more than a year as chairman, Dunlap, who has a reputation for restructuring companies and selling them, has sold off more than $2 billion worth of Scott assets and reduced its work force by about 30%.

Analysts had said a Scott merger with Kimberly-Clark would pose a threat to Procter & Gamble and could attract the attention of other large consumer-product companies such as Unilever.

A combination of Scott and Kimberly-Clark would give the combined company major market positions to compete with Procter & Gamble, one analyst said.

However, even after such a merger, P&G;, which had 1994 sales of more than $30 billion, would still be far bigger than the combined company. P&G;’s products include Bounty paper towels, Charmin toilet tissue and Pampers and Luvs diapers, as well as a variety of soaps, detergents and personal hygiene products.