Unilever Sweetens Bid For Bestfoods
By Matt Paolucci

Unilever NV (UN), according to an article in the Wall Street Journal, has sweetened its bid for Bestfoods (BFO) to more than $70 per share, to nearly $20 billion.

Terms of the new offer were not available.

However, according to a Reuters story also published on Friday, official talks between the two companies have not taken place regarding the deal.

"Talks haven't been taking place. I'm not ruling out conversations, but at this stage there have been no talks," Unilever spokesman Stephen Milton said.

Bestfoods spokeswoman Gale Griffin added, "We are not commenting on the matter. If and when we have something to report, we will."

The new offer comes approximately one month after Bestfoods' Board unanimously rejected an unsolicited offer of $18.8 billion, or $66 a share, from the British conglomerate as financially inadequate.

Aside from the offer from Unilever, Bestfoods has also been in talks with Diageo PLC, the company who owns Pillsbury, as well as with ailing soup giant Campbell Soup Co. (CPB). The extent of Bestfoods' talks with these companies is also unknown at this point.

With the takeover battle for Bestfoods now more than 30 days old, pressure builds for Unilever to up the ante for the New Jersey-based food colossus. But Unilever has been reluctant to sweeten its offer due to a lack of competing bids.

The next few days could be crucial, as Unilever feverishly attempts to get Bestfoods to the negotiating table before it strikes an alternative deal.

PaineWebber analyst John O'Neil said a cash offer valuing Bestfoods in the low-to-mid-$70-a-share range was a "reasonable valuation based on historic consumer deals." O'Neil also cut his 2000 per-share-earnings estimates to $2.73 from $2.75 due to the Euro's weakness, saying profit growth from Europe would slow in lieu of difficult foreign-exchange comparisons."

Many analysts and investors expect Bestfoods, maker of Skippy peanut butter and Knorr soup, to succumb to a higher bid. They feel chairman and CEO C.R. Shoemate is playing this thing for the highest possible bid.

"Unilever will acquire Bestfoods, it's just a question of when and how much," said a large shareholder of Unilever and Bestfoods. "You have a committed buyer and a reluctant seller who is under growing pressure from shareholders."

Another large investor in Bestfoods, specifically, said the Company's "brass is just doing its duty."

Mr. Shoemate "couldn't dream of a better strategic deal," one money manager said, and if he rebuffs Unilever, "there's going to be huge stress on him to maximize shareholder value."

The Anglo-Dutch group has said it is prepared to wait for Bestfoods to come to the table for talks, but the smart money says a deal will come sooner than later.

In afternoon trading, shares of Unilever (UN) were down $0.56 at $49.75, while shares of Bestfoods (BFO) were also lower by $0.81 at $65.06.