(Takeover Targets: Consumer Stocks in Play report updated with detail about PepsiCo.)
NEW YORK (TheStreet) -- Corporate dealmaking is staging a comeback in 2011 after hitting a six-year low in 2009, and a roster of consumer stocks represent potentially lucrative targets.
"Leveraged buyouts likely will remain a persistent theme, as private equity and other buyout firms look to put dry powder to use before capital commitments expire," noted Morningstar analyst R. J. Hottovy earlier this year. "We also expect acquisitions to have a global feel in 2011, as domestic firms look to both established and emerging markets for takeover candidates to enhance anemic domestic returns during the last few years."
In March General Mills ( GIS - Get Report)
Other firms looked to growing niche markets for expansion.
Rostan said he'd be surprised if a bidder emerged for General Mills, unless it were another large-cap packaged food company like Nestle ( NSRGY, though the multinational has made moves into products geared more toward babies. Unilever ( UN - Get Report) would be an unlikely buyer, he said, because it concentrates more on personal care. Kraft Foods ( KFT would also be unlikely, given that it's still digesting its acquisition of Cadbury. General Mills is a "very sizable company," Rostan said, with granola and other health-oriented product lines, especially with its own recent Yoplait acquisition. If some form of M&A were to emerge involving General Mills, it would "have to be a merger of equals with a Campbell Soup ( CPB - Get Report) or maybe an HJ Heinz ( HNZ," Rostan mused, "combining forces for market space and brand power."
Rostan said Peet's could yet prove to be a profitable niche brand for Starbucks, or other smaller coffee players like Caribou Coffee ( CBOU, though, in the case of Caribou, Peet's is more likely to be the buyer than the target. Some kind of merger with
Any combination of the smaller coffee brands, like Peet's, Caribou or smaller independent coffee names, would benefit the group as it works to expand its footprint and compete against the big players like Starbucks, McDonald's and Dunkin, Rostan added.
That PepsiCo has a substantial snack business in FritoLay bodes well for its buying potential. It could purchase Hain Natural, for example, Rostan ventured, or other smaller food brands. Recall that in 2000 PepsiCo won out over Coca-Cola to purchase Quaker Oats in a $13.4 billion deal. The only buyers big enough to buy a huge company like PepsiCo would be Nestle or Kraft, Rostan said, but that scenario is highly unlikely. It's more likely that PepsiCo might divest a few brands and even add a few as it looks to "turbocharge its business," he added. But both Coke and Pepsi recent bought their bottlers, Coca-Cola Enterprises ( CCE and Pepsi Bottling Group, respectively, and continue to fully integrate them, so neither are expected to be on the hunt for making any significant purchases in the near future. -- Written by Miriam Marcus Reimer in New York. >To contact the writer of this article, click here: Miriam Reimer. >To follow the writer on Twitter, go to http://twitter.com/miriamsmarket. >To submit a news tip, send an email to: email@example.com.
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