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Unilever Offers Chesebrough-Pond’s Sweet Deal

December 2, 1986

WESTPORT, Conn. (AP) _ Anglo-Dutch consumer-products giant Unilever on Tuesday began a friendly $3.1 billion offer for Chesebrough-Pond’s Inc., rescuing the company from the hands of American Brands Inc., which had launched a hostile takeover bid.

Analysts praised the $72.50-per-share cash offer, which was announced by Unilever late Monday, as one that would strengthen Chesebrough and enhance its market value.

″This will make Chesebrough-Pond’s consumer products a part of a worldwide line, add distribution strength and make its shareholders wealthy, which is the prime responsibility of management,″ said Jeffrey Ashenberg, an analyst with Dean Witter Reynolds Inc.

Wall Street also applauded the deal with Chesebrough’s stock closing on the New York Stock Exchange at $71.62 1/2 , up from $68.50 Monday.

Meanwhile, American Brands, which began a $66-a-share hostile offer for Chesebrough on Monday, remained silent on whether it would initiate a bidding war.

″We are studying the situation,″ said Brian Dobson, a spokesman for American Brands, a Greenwich-based packaged consumer goods and financial service company.

Ashenberg said he thought the Unilever-Chesebrough deal would be completed by year’s end so shareholders could enjoy tax benefits under the current tax code. He said Unilever has the financial ability ″to succeed if any bidding war were to unfold.″

″You have to recognize that American Brands might come back, but I don″t think that will happen,″ he said.

Eileen Gormley, a securities analyst with Thomson McKinnon Securities, added it was possible ″that someone else could come in higher.″

″It looks as though Chesebrough-Pond’s granted them certain options for this (merger) and it looks as though they’re happy with it,″ Gormley said.

As part of the merger agreement, Chesebrough-Pond’s granted Unilever options that appeared to be intended to prevent any effort by another company to sever the agreement.

Chesebrough-Pond’s gave Unilever an option to buy its Ragu packaged-foods subsidiary at an undisclosed price. It also granted Unilever an option to purchase as many as 7.9 million authorized but unissued shares, representing 18.5 percent of Chesebrough’s shares outstanding at $72.50.

Unilever began a tender offer for all of Chesebrough-Pond’s 42.7 million common shares outstanding on Tuesday, said Bert Hochman, a Unilever spokesman in New York. Unilever’s offer expires Dec. 30 and is conditioned on at least 51 percent of Chesebrough-Pond’s outstanding shares being tendered.

″This has been a very amicable merger agreement,″ Hochman said.

He said Unilever was attracted to Chesebrough because it has a strong position in the consumer-products market and has a good growth potential.

″Unilever has frequently stated it wanted a strategic acquisition in the United States, preferably in the personal products area,″ Hochman said.

With 1985 sales of $21.6 billion, Unilever is one of the world’s largest manufacturers of consumer branded products and packaged goods. With headquarters in Britain and the Netherlands, it employs about 300,000 people and operates in 75 countries.

Chesebrough-Pond’s, based in Greenwich, produces Vaseline personal care items, Ragu spaghetti sauces, Prince Matchabelli cosmetics and Bass shoes. In 1985 its Consumer Products Group had sales of $1.6 billion and the Chemical Products Group had sales of $1.3 billion.

Unilever said it is considering selling ″a significant part″ of the Chemical Products Group, which American Brands had also intended to do.

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