American Brands, a conglomerate that makes everything from Lucky Strike cigarettes to Master Lock hardware, saw its stock price jump on Friday on rumors of a takeover by Unilever, a British-Dutch consumer and food products giant.
The rumors surfaced less than a year after American thwarted another takeover bid made by E-II Holdings Inc., a group of food companies. American, based in Old Greenwich, Conn., counterattacked by buying up E-II and later selling off parts of the company.
The latest takeover rumors fueled a sharp increase in American shares traded on the New York Stock Exchange in heavy trading. The company's stock rose $10.125 to close at $67.75. American was the most actively traded issue with 1.9 million shares changing hands.
An official for American Brands said the company does not comment rumors or stock market activity. Officials for Unilever, which makes such well known products as Imperial margarine, Lipton teas and Q-Tips swabs--could not be reached for comment on Friday.
Analysts said American Brands has plenty of attractive businesses that could be sold off after a takeover. Most of American's profits and sales come from tobacco products, like Pall Mall and Carleton cigarettes. But the company is also a major distiller of liquor products, such as Jim Beam bourbon and Gilbey's gin, and office equipment, such as Swingline staplers. American also owns two large insurance companies, United Life and Southland Life.
"It's got a lot of interesting little pieces," said analyst Allan Kaplan at Merrill Lynch Research. "Any aggressive company could be interested in one or two core businesses and then be interested in selling the rest. And their tobacco business is a nice cash cow."
The company could fetch as much as $95 a share, said Kaplan.
But Kaplan and other analysts were not convinced that Unilever, with headquarters in both London and Rotterdam, would be a likely suitor for American.
"It's stupid," said industry analyst Jay H. Freedman at Kidder, Peabody & Co. "There is no business overlap. There is no synergy."
Eileen Gormley, who follows household and personal product companies for Thomson McKinnon Securities, said that Unilever has in the past "indicated they wanted acquisitions that would be in businesses in which they are already familiar. You wonder what they see in American Brands."