Bestfoods (US)

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Until its acquisition by Unilever in 2000, Bestfoods was America's most international food company, with a broad range of products sold in more than 110 countries worldwide. More than 60% of sales were generated outside the US from brands such as Hellmann's and Knorr. High operating margins made the company one of the food industry's most admired businesses, and in 2000 it became a target for Unilever who snapped the group up for $20.3bn in what was then the biggest takeover in the global food industry since KKR's infamous Nabisco purchase. 

Bestfoods was itself formed from a number of mergers and acquisitions, and until three years prior to the Unilever deal had been known as CPC International, and before that The Corn Products Company. Its seeds were sown in 1842 in the US when Thomas Kingsford established the first commercial mill to extract starch from corn, a far cheaper source than the more commonly used wheat or potatoes. Starch was used primarily as a laundry additive, but Kingsford's corn-derived starch was of much higher quality than that of rival manufacturers. As a result of further refining of the process during the 1850s, Kingsford discovered that an even purer form of his corn starch could be used as a thickener for soups and sauces. A number of other factories also sprang up to exploit the same process, and in 1899, T Kingsford & Son merged with its main competitor, the maker of Argo corn starch, and two other rivals to form the United Starch Company. 

Another group of companies had gone even further with the refining process to convert the corn starch into sugar, and in 1900, three of these businesses also merged to form the Corn Products Company. Its principal occupation was to produce glucose and other sugars for trade sale to confectioners and other food manufacturers, but two years later Corn Products launched its first branded corn syrup for retail sale under the name Karo. As a result of further consolidation, all of these different businesses eventually merged in 1906 as a single giant enterprise, the Corn Products Refining Company. Following further acquisitions, this corporation had established a virtual monopoly on US production of glucose and corn starch by 1910.

In 1911, Corn Products launched a new brand, Mazola, the first refined corn oil for cooking and salad use. Mazola offered a far better frying quality than more commonly used shortening, and CPC rolled out the brand nationally and then internationally. During the 1920s, the group established operations around the globe in Europe, Latin America and Asia. As part of its expansion, CPC acquired stakes in a number of local food companies, including German food business Knorr, which had launched only a few years before Kingsford invented his corn starch and had a fast-growing business selling soup mixes and bouillon cubes. Corn Products gradually increased its stake in Knorr during the 1930s and 1940s until the company finally sealed a merger with Knorr and a third food company, The Best Foods Company, in 1958. 

Best Foods was the offshoot of another oil company, American Linseed Inc, later Hecker Products. This had gone through several incarnations of its own, becoming at one stage part of the diversified conglomerate Gold Dust Corporation whose other interests included soaps and Shinola shoe polish. Operating principally in California during the 1920s, Best Foods was known mainly for its own-brand mayonnaise and peanut butter. In 1930, it established a joint venture with East Coast competitor Richard Hellmann Company, then a subsidiary of what subsequently became General Foods. Initially the two companies pooled their respective mayonnaise manufacturing and distribution facilities, but in 1942 Best Foods bought out its partner's shareholding to take full control of both businesses. In 1955, Best Foods also acquired another food company Rosenfeld Packaging, makers of Skippy peanut butter.

CPC's acquisition of Best Foods and Knorr created a sizeable force in the food industry, controlling four major brands in Hellmann's, Mazola, Skippy and Knorr. In 1964, the group formed a joint venture with Ajinomoto to exploit the Japanese market, and by 1966, The Corn Products Company's sales topped $1bn. At the end of the decade, it changed its name to CPC International to reflect the widening range of its brands. In 1970, the group added breads to its portfolio with the acquisition of US bakery business SB Thomas.

During the 1980s, pasta joined the family with the acquisition of Mueller's, then the US's leading dried pasta brand. A series of other global purchases followed including Bovril, Marmite, Ambrosia and Pot Noodle in the UK, Santa Rosa jams in Italy, Pfanni potato products in Germany and Lesieur dressings in France. At the same time, the joint venture with Ajinomoto expanded to cover six other Asian territories, and the purchase of the Entenmann's cake business from Kraft in 1995 added a new baking division to the group. Throughout all of this, the commodity-based corn refinery division of the company had become increasingly marginalized. In 1997, it was spun off to shareholders as Corn Products International, and CPC changed its name to Bestfoods. The same year, Bestfoods acquired Spanish food company Starlux.

In 1998, the group formed a joint venture with South African licensee Consolidated Grocery Products to create a $415m business managing both companies' African and Israeli interests. In 1999, rumours of merger talks with Heinz spread to the financial markets, but were denied by both companies. Instead, the group acquired US sauce and seasoning business Case Swayne for $150m. But tentative merger talks continued behind the scenes with a number of companies, including Unilever. By May 2000, Unilever had grown tired of the apparent reluctance of Bestfoods' board to reach suitable terms and went public with a firm offer, presenting the company's shareholders with an all-cash takeover bid, worth around $66 per share. The American company declined the offer, but agreed that a merger with Unilever would be beneficial in terms of cost savings and suggested that a higher offer might be acceptable. After several weeks of stalemate, the deadlock was broken when Unilever agreed to increase its bid to $73 per share, and take on around $4bn of Bestfoods' debt. This sealed a final price of $20.3bn, making it the biggest takeover in the global food industry since KKR's Nabisco purchase. 

The deal was completed in November 2000. As part of the purchase, Unilever was forced to sell off several businesses or brands. The first to be sold was The Bestfoods Baking Company in the US, previously a standalone division within Bestfoods. It was acquired by Canadian food company George Weston Ltd for almost $1.8bn. Its brands included Entenmann's, Thomas' English muffins and bagels, and Orowheat, Brownberry and Arnold breads. The bakery business had accounted for about a fifth of Bestfoods' sales in 1999. 

Following the merger, other brands were sold to Campbell Soup and Associated British Foods (see Unilever Foods). The remaining Bestfoods brands were absorbed into Unilever's international foods businesses. Bestfoods chairman & CEO Dick Shoemate retired from the group; other senior managers were transferred across to Unilever.

Last full revision 6th October 2017


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