PURINA MILLS announces takeover offer from unidentified buyer
Tuesday, May 8th 2001, 12:00 am
By: News On 6
ST. LOUIS (AP) _ Trading in Purina Mills Inc. stock was halted Tuesday afternoon when the company announced it had received a takeover proposal from an unidentified third party.
The announcement followed a phenomenal week during which shares of Purina Mills, a St. Louis-based animal feed producer, more than doubled in heavy trading.
The company's stock was trading at $17.90 Tuesday afternoon on the Nasdaq Stock Market, up 55 cents, when trading was halted for the announcement. When trading resumed a few hours later, shares fell to $17.65.
Purina Mills said in a statement that the proposed buyout is subject to numerous conditions, including a review of the company's finances and approval by both parties. The name of the suitor and possible terms were not disclosed.
Competitors possibly interested in acquiring Purina Mills would include Archer Daniels Midland Co., Cargill Inc. or ConAgra Foods, said food analyst Jeffrey Kanter of Prudential Securities Inc.
But Kanter doubted any of those companies were in negotiations because analysts probably would have heard whispers that a deal was in the works.
``We would have heard rumors,'' he said.
Spokesman for ADM and ConAgra didn't immediately return calls seeking comment.
Cargill spokesman Mark Klein said the company does not comment on speculation, but said Cargill is excited about its pending acquisition of Agribrands. Both Agribrands and Purina Mills are spinoffs of Ralston Purina.
In February, Purina Mills stock traded as low as $7.84, rising to around $10 a share in March. But starting on April 30, the company's shares made large daily gains on unusually heavy trading.
Before the rapid rise, only a few thousand of the company's shares were traded daily. The volume skyrocketed to 123,400 shares on May 1 and 271,500 shares on May 4 _ the company's single largest trading day of the year until Tuesday, when 306,900 shares were traded.
``Somebody saw this coming,'' Kanter said.
Purina Mills is the largest producer of animal feed in the United States, selling four million tons of feed for hogs, chickens, horses, and cattle yearly. The company also sells specialty feed for laboratory animals and exotic pets.
The company has 49 plants and about 2,300 employees nationwide.
A slump in hog feed sales forced Purina Mills into Chapter 11 bankruptcy protection in 1999 and the company emerged last year before going public.
In March, the U.S. Food and Drug Administration sent Purina Mills a letter warning the company about the safety of its animal feed. The company said the letter had more to do with proper labeling and record-keeping than the safety of its products.
FDA officials said in the letter two inspections at a Purina Mills feed plant in Oklahoma City found ``significant deviations'' from regulations regarding the proper separation of feed.
Founded in 1894 by William H. Danforth, Purina Mills began as a St. Louis feed mill.
The company became Ralston Purina Co., which sold its domestic livestock feed business, Purina Mills, in 1986 and now makes pet food. In 1998 Ralston Purina spun off its international agricultural animal feeds business as Agribrands International with former Ralston Purina CEO William Stiritz in charge.
Earlier this year, Ralston Purina agreed to be bought by Geneva-based Nestle SA for $11 billion.
Both Ralston Purina and Purina Mills continue to use the Purina trademark and red-and-white checkerboard logo.