Dive Summary:
- In the wake of Berkshire and 3G's Heinz takeover, the New York Times Dealbook has published an article looking at which food companies could be next in line and why they are viewed as good investments.
- Among the reasons food companies could be primed for takeovers, Dealbook highlights the strength of food brands, the stability of profits, the promise of developing markets and a lack of opportunities for technological disruption.
- While there are good reasons behind why these companies won't be bought, such as being too big to buy or needing shareholder consensus before a takeover can go forward, Dealbook highlights several "downright cheap" food giants which are viable takeover targets, including General Mills, Campbell Soup, ConAgra Foods, Danone and Unilever.
From the article:
"... The share prices of such companies depends on future cash flows. In many sectors, high profit margins are a fleeting thing — just ask yellow-pages publishers, or record-store clerks. But food-makers’ strong finances may have staying power. This is the sort of 'moat'-like protection that Mr. Buffett famously prizes. ..."
