Brand Names Become Hot Assets in Takeover Games

By Stevenson, Richard W. | THE JOURNAL RECORD, November 1, 1988 | Go to article overview

Brand Names Become Hot Assets in Takeover Games


Stevenson, Richard W., THE JOURNAL RECORD


In the supermarket, everyday products like Velveeta and Oreos sell for a few dollars or less.

In the frantic market where companies are bought and sold, those products are worth billions.

The high-priced bidding now under way for some of the nation's largest consumer products companies illustrates the value of such well-known brand names and the gamble that many investors are willing to make to control them.

While established products are by no means invulnerable, companies increasingly think that names like Kraft in cheeses or Parkay in margarine are their most valuable assets, more so than factories, real estate or even employees, according to analysts, executives and other experts.

Once a brand-name product - especially a market leader - has become familiar to the consumer through advertising and repeated use, its sales tend to remain healthy even during economic slumps or periods of corporate mismanagement.

A study of 30 product categories by the Boston Consulting Group found that of the brands that were No. 1 in their category in 1930, 27 are still No.1. Among them are Ivory Soap, Campbell's Soup and Gold Medal flour.

``With an established brand name, the product keeps selling through thick and thin,'' said Emanuel Goldman, an analyst at Paine Webber Inc.

Because they are confident that their targets' brands will generate a steady flow of cash that can be used to repay debt, the companies, managers and investors bidding for three huge food companies - RJR Nabisco, Kraft. and the Pillsbury Co. - think they can safely borrow huge sums to finance the deals, analysts said.

They are also confident because those companies have mastered the complicated art of exploiting household names.

The allure of established consumer products is proving strong to some of the nation's most astute investors and executives.

RJR Nabisco, in addition to Oreos and Del Monte fruits and vegetables, sells Ritz crckers, Planters peanuts, Milk Bone dog biscuits and A-1 Steak Sauce, as well as Salem and Winston cigarettes.

RJR Nabisco said last week that some of its top managers, along with Shearson Lehman Hutton Inc., were considering offering $17.6 billion to buy out the company's public stockholders. This week, the investment firm Kohlberg, Kravis, Roberts & Co. entered the bidding with an offer of $20.6 billion.

Kraft, in addition to its cheeses, sells Parkay margarine, Philadelphia Brand cream cheese, Miracle Whip toppings and Velveeta cheeses.

Philip Morris, which owns General Foods as well as the world's largest tobacco operations, reached an agreement Sunday to buy Kraft for $13.1 billion.

Grand Metropolitan P.L.C., a British conglomerate, bid $5.2 billion for Pillsbury. Pillsbury sells ``Poppin' Fresh'' dough products, Green Giant vegetables, Haagen-Dazs ice cream and Van de Kamp's frozen foods, in addition to owning the Burger King restaurant chain.

But brand-name goods still do not sell themselves.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Brand Names Become Hot Assets in Takeover Games
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.