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Pillsbury Had No Choice, Analysts Say of Takeover

December 19, 1988|Associated Press

MINNEAPOLIS — After 2 1/2 months of just saying "no," the Pillsbury Co. finally had no choice but to agree to a sweetened $5.7-billion takeover bid from Britain's Grand Metropolitan PLC, securities analysts said today.

"They had no other direction to go. We knew that from day one," said Craig Carver, an analyst at Dain Bosworth Inc. in Minneapolis.

Two days after major legal setbacks, Pillsbury, a Minneapolis-based food and restaurant company, agreed to the takeover Sunday. Grand Met will purchase all outstanding shares of Pillsbury common stock for $66 per share in cash, $3 higher than Grand Met's previous best offer.

Most Jobs Secure

Besides benefiting Pillsbury shareholders, the Grand Met takeover should secure the jobs of most company employees, analysts said, but top Pillsbury executives probably should start looking elsewhere for work.

Pillsbury's directors and officers, who owned just shy of 1 million shares, stand to make a profit of $28.5 million because of the rise in the price of their stock, which was worth $36 about six months ago. Philip L. Smith, who became chairman, president and chief executive officer of Pillsbury on Aug. 1, held 33,000 shares.

Pillsbury was trading at about $39 a share the day before Grand Met launched its $60-per-share hostile takeover bid Oct. 4. It closed today at $65.37 1/2, $3.12 1/2 higher than its Friday closing price.

Pillsbury spokesman Larry Haeg said he could not comment on whether top executives or employees would be laid off. "You have to ask Grand Met," he said.

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