Unilever Gobbles Bestfoods

Bestfoods has agreed to be purchased by European consumer goods conglomerate Unilever in an all-cash deal worth $20.4 billion, or $73 a share.

The final offer, made nearly a month after Unilever first courted Bestfoods, was 11 percent higher than Unilever's original unsolicited bid of $18.4 billion, or $66 a share.

Among Bestfoods' products are Skippy peanut butter and Hellmanns mayonnaise.

Unilever will also assume about $4 billion in debt as part of the deal. The companies estimate their combination will lead to savings of up to $750 million annually.

Wall Street analysts praised the agreement as one in which both companies got what they wanted: Bestfoods received what company officials felt was a fair price, and Unilever obtained what officials believe is one of the best-run food companies in the world.

Shares of the Englewood, N.J.-based Bestfoods surged nearly 10 percent Tuesday on the New York Stock Exchange, up $6.25 to $69.25 before halting on the news. Shares of Anglo-Dutch conglomerate Unilever were halted at $50.93, up 56.25 cents, also on the NYSE.

The deal, which is subject to regulatory approval in both Europe and the United States, is expected to be completed by the end of the year.

A month ago, Bestfoods spurned Unilever's original offer, saying the bid was too low and that Bestfoods preferred to remain independent.

But Unilever, which owns Lipton teas, Ragu sauces, Vaseline, and Pepsodent toothpaste and which recently bought Ben & Jerry's ice cream business, was persistent, discreetly keeping channels of communication open.

Bestfoods officials remained coy, refusing to confirm or deny speculation that the company was talking with several other large food companies.

Since rejecting Unilever's original offer, Bestfoods was widely rumored to be in negotiations to sell all or part of its operations to Diageo PLC, owner of Pillsbury baking products.

Then reports surfaced over the weekend that Bestfoods was close to acquiring long-ailing Campbell Soup for $15 billion.

But most observers who follow the company said Bestfoods was likely using the speculation as a bargaining ploy to extract a higher offer from Unilever.

The $20.4 billion deal is significantly more than the last major food acquisition, the $5.8 billion purchase of Pillsbury Co. by the British distiller Grand Metropolitan in 1988. Grand Metropolitan PLC and Guinness PLC merged in 1997 to form Diageo.