Updated from 8:52 a.m. EDT
Shares of snack maker
( NA) and its parent company,
Nabisco Group Holdings
, made steady gains Monday as a contemplated sale appeared to grow into an auction.
( DA) have submitted preliminary bids to buy Nabisco Group Holdings or its food subsidiary,
The Wall Street Journal
reported. The offers would follow the $19-a-share revised bid made Friday by the financier Carl Icahn for Nabisco Group Holdings.
Nabisco Holdings shares gained 3 1/8, or 7%, to 47 1/16 after reaching a 52-week high of 47 3/16. Shares of Nabisco Group Holdings gained 2 3/8, or 12%, to 22 1/16. (Nabisco Holdings closed up 2 1/16, or 5%, at 46 while Nabisco Group Holdings closed up 3 5/16, or 17%, at 23.)
According to the
, French cookie maker Danone has submitted a bid for Nabisco Holdings and Britain's
Cadbury Schweppes PLC
has submitted a bid for the non-cookie portion.
Phillip Morris, the world's largest tobacco concern and maker of such products as Marlboro cigarettes, owns
, with its Maxwell House and Post cereals brands, and
. A company spokesman, Chris Kircher, had no comment on what he called rumor and speculation. The
cited "people familiar with the matter."
A Cadbury spokeswoman said the
statements were not based on any discussions with the company but declined to elaborate. A Danone spokeswoman, Diane D'Oleon, did not immediately return calls, but a spokeswoman for American subsidiary
said she had spoken to D'Oleon and could confirm that the parent company has had "preliminary discussions" with Nabisco. She could not say whether a bid has been placed.
Nabisco Group Holdings, whose sole asset is an 80.6% stake in Nabisco Holdings, the maker of such products as Oreo cookies and Ritz crackers, said last month that it was exploring a sale of either itself or its subsidiary. Both Nabisco companies are based in New York.
The decision followed Icahn's threatened tender offer for the holding company, which he made in March in his fourth buyout attempt since 1996.
On Friday, Icahn
increased his bid from $16 a share to $19 a share plus a two-year note with a face value of $3 a share for the 90.4% of Nabisco Group Holdings he does not already own. His offer is valued at about $6.5 billion. No one but Icahn has publicly disclosed an offering price for either company.
Shares in the holding company trade at a discount of approximately 30% based on the value of its subsidiary due to the so-called tobacco taint. Because the company formerly owned
( RJR), investors perceive a possible legal liability to Nabisco Group Holdings in the event RJR goes bankrupt from adverse tobacco judgments.
Analysts have speculated that Nabisco Holdings could fetch $14.4 billion, or around $54.50 a share.
The auction process is gathering momentum and a sale is expected by late June or early July, according to the investment banking firm
Salomon Smith Barney
Phillip Morris' main interest lies in the food company, analysts said. Should the holding company sell its interest, turning itself into a cash pool tainted by tobacco liability, RJR might be a potential
buyer for Nabisco Group Holdings, analysts have said.
Phillip Morris shares rose 2 1/8, or 9%, to 26 7/16 in midday trading and the American depositary receipts of Danone gained 1/16 to 48 3/4, while Cadbury's ADRs slipped 1/4, or 1%, to 27 3/8. (Phillip Morris closed up 2 11/16, or 11%, at 27. Danone closed up 11/16, or 1%, at 49 3/8 while Cadbury's ADRs closed down 1/4, or 1%, at 27 3/8.)