Gen. Mills Stock Up on Rumored Takeover by NestlŽ
General Mills, Inc., stock soared to a 10-month high on Tuesday morning amid speculation that it will be bought by Swiss food giant NestlÅ½, SA.
Tom Forsythe, vice president of corporate communications for Golden Valley-based General Mills, returned a Tuesday morning phone call but declined to comment on the rumors.
However, mid-morning Tuesday, the company's shares were trading at $38.50, up about 0.7 percent-and the highest they've been since June 21, 2010, when they hit $38.85.
“There's been a lot consolidation in the food names recently, and people are thinking NestlÅ½ may come in and buy a large U.S. food company,” Jamie Lissette, founder of online investor discussion forum Hammerstone Group, told Bloomberg.
Speculation about a takeover by NestlÅ½ isn't entirely new. In early 2010, The Wall Street Journal called General Mills an “appetizing” target for NestlÅ½, which had just experienced a windfall after selling its 52 percent stake in eye-care company Alcon for $28.1 billion.
General Mills is Minnesota's eighth-largest public company based on revenue, which totaled $14.8 billion for the fiscal year that ended in May 2010. But NestlÅ½, with $93 billion in 2010 sales, is more than six times larger.
The two companies have worked together successfully in the past. Together, they operate Cereal Partners Worldwide-a breakfast cereal joint venture that markets numerous brands, including Cheerios and Nesquik, in more than 130 countries worldwide. NestlÅ½ also has exclusive license to make and distribute General Mills' HÅ agen-Dazs brand within the United States and Canada.
However, the two companies also have a rivalry-and not just in terms of sales of their products. In late February, both General Mills and NestlÅ½ were vying for a 50 percent stake in well-known yogurt manufacturer Yoplait. Each company submitted an offer valuing Yoplait at about 1.6 billion euros, and General Mills last month said that it had entered into “exclusive negotiations” for the acquisition.