H.J. Heinz Co. has been rumored as a takeover target this week by Barron's, but don't expect to see the ketchup giant on the auction block anytime soon given the state of the financial markets. However, the topic of who might gobble up Heinz is still worth ruminating over.
Continue reading below
One food industry source had an idea:
"I think Kraft Foods Inc. might be the best buyer given similarities in product lines," the source said, but added any potential deal is still far away. "I think the larger companies have to figure out their internal strategies first, before possibly double-downing on some potential problems."
Along with its ketchup division, Heinz has a meals and snacks group that operates the Ore-Ida, Bagel Bites, Boston Market and Delimex brands. The company also has a infant/nutrition division that owns the Nurture, Plasmon and Wattie's brands.
Similarly, Kraft owns the Oscar Meyer Deli Creations, South Beach Living and the Garden Harvest Toasted Chips
Additionally, Baron's points out that Kraft has had trouble increasing profits, so perhaps a merger between these two companies would make sense.
"Heinz is clearly inexpensive right now," said Mark Boyer of New York research and investment firm Mark Boyar & Co., according to Barron's. The report also mentioned other strategics such as Nestle SA and Unilever NV.
The latest rumor contrasts Heinz's previous strategy that it is going to look for some acqusitions.
"The pipeline for potential acquisitions has risen to unprecendented levels, " CFO Art Winkleback was previously quoted as saying.
Only time will tell of what Heinz's next move will be. But if shares remain depressed (Barron's notes that Heinz is down 27% over six months whereas peers are down about 10% over the same time) even after the recovery, it clearly could become a snack for a rival. - Demitri Diakantonis
Comments
There was speculation that Unilever P.L.C., the British-Dutch consumer products giant,would make a takeover bid, however there's no announcement yet. So let's wait.