Best Foods Rejects Bid From Unilever
By Matt Paolucci

Tuesday night, Dutch consumer goods conglomerate Unilever (UN) offered to buy U.S. food-company Bestfoods (BFO) in an $18.4 billion takeover bid. But Bestfoods quickly rejected the $66 per-share offer, calling it "financially inadequate."

The bid from the Anglo-Dutch food and consumer goods titan was widely considered a low-ball bid by analysts, who view a fair offer for the Englewood Cliffs, N.J.-based company closer to the $70 level.

"We believe this is the preliminary offer and Bestfoods will bid up the offer to settle at about $70," said John McMillin of Prudential Securities.

Bestfoods makes such products as Knorr soups, Skippy peanut butter and Hellmann's mayonnaise.

Unilever first approached Bestfoods back on April 20 with a bid of $61 to $64 per share.

Unilever's offer for Bestfoods represents more than a 30 percent premium over the Englewood Cliffs, N.J.-based company's closing price of $50.56 on Tuesday.

The offer comes just eight months after Bestfoods aborted merger discussions with H.J. Heinz Co. (HNZ) to create the second-biggest U.S. food-company behind Kraft Foods.

"Indeed, the board affirmed that Bestfoods should continue to focus on the accomplishments of its proven business strategies and determined that there is no reason to explore your proposal further," C.R. Shoemate, chairman and CEO of Bestfoods said in a letter to Unilever Chairman Antony Burgmans.

Unilever, whose brands include Lipton teas, Vaseline and Pepsodent toothpaste, agreed last month to purchase Vermont- based super premium ice cream company Ben & Jerry's for $326 million and diet foods company Slim Fast Foods for $2.3 billion. Unilever had 1999 sales of $43.7 billion.

Bestfoods has been viewed as the cream of the crop among U.S. food companies because of its "power brands", many of which are popular in emerging markets, and its strong global distribution system, analysts said.

The company, which generated sales of $8.6 billion in 1999, derives roughly two-thirds of its sales overseas, while the other third comes from emerging markets.

"They (Bestfoods) have a number of core products that are very good for penetrating emerging markets with low per-capita GDP, specifically the Knorr brand of dried soups and sauces. They possess low value-added basic foods that consumers in emerging markets can afford," Andrew Lazar of Lehman Brothers said.

The Unilever offer comes amid a flurry of bids this week by European companies seeking to buy U.S. companies.

On Monday, Dutch food group Numico NV agreed to purchase Rexall Sundown Inc. (RXSD), a leading vitamin and nutritional products maker, for $1.8 billion.

Also on Monday, ING Groep NV, based in the Netherlands, said it would buy ReliaStar Financial Corp. (RLR) of Minneapolis for a total of $6.1 $1 billion in debt.

Unilever gave Bestfoods until the end of business on Thursday to come to the table to reconsider its bid.