CHICAGO — A New York investment banking firm said Tuesday that it has added $218 million in securities to its offer to buy Beatrice Cos. and take the food and consumer products company private.
Kohlberg Kravis Roberts & Co. said it raised its offer to $47 for each share of Beatrice common stock from its previous offer of $45 a share to total more than $5 billion.
With 109 million common shares outstanding, Beatrice would fetch $5.1 billion if its stockholders accept the offer, making it the largest leveraged buy-out on record.
The new offer included $40 cash and $7 in preferred stock, Beatrice said. The previous offer, rejected as "inadequate" last week by Beatrice's directors, was $40 cash and $5 in preferred stock.
The new offer, which Kohlberg Kravis made in a letter received by Beatrice on Tuesday, was expected, and the stock market reacted coolly, pushing the stock down 37.5 cents a share to $43.50.
Market analysts had predicted when Kohlberg Kravis made its initial offer Oct. 16 that the offer was too low and a higher offer would be made or another bidder might make a competing offer.
"It's not surprising that a higher offer has been submitted," said John Bierbusse, a Beatrice analyst with Duff & Phelps in Chicago.
"I think the (Beatrice) board was suggesting (when it rejected the initial offer) that it was open to some negotiation on that point," he said.
June Page, an analyst in New York with McKinley Square, Allsopp Securities, said the price of Beatrice stock may have fallen after the announcement because no competing offers have been made.
"We haven't seen any other bidders coming in, which had been a definite possibility, so $47 to $50 might be the top range," she said.
However, she added, some of Beatrice's management might still make a competing offer, a possibility that was suggested shortly after Kohlberg Kravis made its initial offer.
A prepared statement released by Beatrice spokeswoman Pat Brozowski said the directors will meet to consider the newest offer.
After it made the initial offer, Kohlberg Kravis said it had arranged a credit line of $3.5 billion. The investment banking partnership also confirmed the involvement of Donald P. Kelly, former chairman of Esmark Inc., a consumer products company that was purchased by Beatrice last year.