(Consumer stock takeover report updated with info about SABMiller's hostile takeover bid for Australia's Foster's.)
NEW YORK ( TheStreet) -- Brewer SABMiller took its hostile $10 billion bid for Australia's Foster's directly to shareholders, underscoring a growing trend of corporate dealmaking in the consumer stock sector.
Ralcorp said the acquisition would add 30 cents a share to its earnings in the first year after the sale is complete. It plans to fund the deal through short-term debt. Ralcorp's purchase should help the private-brand food products maker improve its margins after it laid plans last month to spin off its Post Foods cereal unit. That announcement came on the heels of Ralcrop twice rejecting unsolicited takeover bids from ConAgra Foods ( CAG). Sara Lee announced its intention to divest its refrigerated dough business earlier this year. The unit makes up about 3% of its annual revenue.
The sale comes as part of the food maker's larger plan to spin off its North American retail and food service business, a company that will trade publicly and retain the Sara Lee name. That business includes brands such as Hillshire Farm lunch meat, Ball Park hot dogs and Jimmy Dean sausages. The other company, Sara Lee's remaining international bakery and beverages businesses, which includes Douwe Egberts and L'Or brands, was as yet unnamed but referred to as CoffeeCo and could be based overseas. In May, Sara Lee said it was on track with the split, expected to be complete in 2012.
Icahn said July 20 that his firm and affiliates would escrow $5.2 billion, inclusive of his ownership of 12.5 million shares of Clorox, adding that there is no legitimate concern that he could raise the remaining $7.8 billion in financing needed to complete his proposed deal. Icahn sent another letter to Clorox CEO Donald Knauss on July 20 calling the board's concerns "misguided," and wrote that "for Don Knauss and the rest of the board to claim our proposal remains inadequate and at the same time tout your record for shareholders seems a bit absurd."
Icahn's original proposal was widely viewed as merely a way to put Clorox in play. Entities controlled by Icahn own roughly 9.4% of Clorox's outstanding common stock, making him the company's largest shareholder. He tapped consumer products makers Procter & Gamble ( PG), Unilever ( UN), Kimberly-Clark ( KMB) and Colgate-Palmolive ( CL) as possible "strategic buyers" that might offer "superior bids." "We are in a unique position as your largest shareholder in that we are wearing two hats -- one as a shareholder and another as a buyer," Icahn wrote in his July 15 letter.
The deal also included Colgate selling its laundry detergent business in Colombia to Unilever for $215 million. The selloff of Unilever's deodorants and bath-care business in Europe was required on antitrust grounds for European Union's clearance of the $1.82 billion purchase of Sara Lee's ( SLE) personal care business in 2010.
The deal did not come as a surprise as Wendy's has said it was looking for strategic alternatives for Arby's, which has trailed Wendy's performance. Under the terms of the deal, Wendy's will retain an 18.5% stake in Arby's, which has more than 3,600 restaurants systemwide. Wendy's will receive $130 million in cash at the closing of the deal; its 18.5% stake is expected to be valued at around $30 million.
Atlanta-based Roark Capital Group will assume around $190 million in debt related to the Arby's chain, which mainly consists of capital lease and sale-leaseback obligations. Wendy's expects to realize an income tax benefit of around $80 million over the next few years. The deal was expected to close early in the third quarter.
The deal valued California Pizza Kitchen at $18.50, a premium of nearly 11% compared with the California Pizza's closing price of $16.71 the day before news of the deal was reported. California Pizza Kitchen, a casual-dining restaurant chain, operates around 250 stores in 32 states and a few foreign countries. The pizza chain last spring hired an investment bank to explore a potential sale.
Hershey ( HSY)
Citi analyst David Driscoll noted that West's exit from Hershey's masthead could make the company a prime
Sara Lee ( SLE)
Sara Lee intends to spin off its North American retail and food service business, a company that will trade publicly and retain the Sara Lee name. That business includes brands such as Hillshire Farm lunch meat, Ball Park hot dogs and Jimmy Dean sausages. The other company, Sara Lee's remaining international bakery and beverages businesses, which includes Douwe Egberts and L'Or brands, was as yet unnamed but referred to as CoffeeCo and could be based overseas. On May 5, Sara Lee said it is on track with the split, expected to be complete in 2012. On May 4, Sara Lee completed the sale of its global shoe-care business, in a majority of countries, to SC Johnson for 245 million euros ($364 million). The sale of its North American fresh bakery business should close by the end of this fiscal year, Sara Lee said. Its insecticides business sale is expected to close in the second half of 2011. Sara Lee also said it acquired Aidells Sausage for $87 million in cash during the recent quarter in an effort to boost its meat business in North America and expand its footprint into the market of organic and natural meats.
McCormick & Schmick's Seafood Restaurant ( MSSR)
P&G shareholders will retain a 57% stake in the new company while Diamond shareholders will hold the rest. Diamond shareholders will also take on $850 million of Pringles debt. Diamond Foods, meanwhile, acquired Kettle Foods for $615 million in 2010. In 2008 it acquired Pop Secret from General Mills ( GIS) for $190 million, and in 2006 it acquired certain assets from Harmony Foods. Diamond, best known for its Emerald brand of nuts and trail mixes, Pop Secret popcorns and Kettle potato chips, will more than triple the size of its snack business with the addition of Pringles. The company now expects net revenue to total $1.8 billion in the fiscal year ending July 31, 2012.
Yum! Brands ( YUM)
Yum! said it was looking for a buyer for LJS and A&W but had yet to find one. "We do not believe Long John Silver's and A&W-All American Food restaurants fit into our long-term growth strategy," CEO David C. Novak said. "Accordingly, we have decided to put these two great brands up for sale and we will complete the sale only once the right buyer or buyers have been identified and we can ensure a seamless transition." Yum! added that it "does not expect the eventual sale to have a material impact to its ongoing earnings or cash flow." -- 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: firstname.lastname@example.org.
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