Recipe for A Takeover

For the past year the Pillsbury Doughboy has not had much reason to let out his giggle. While Pillsbury enjoys strong sales of vegetables, baking products and other grocery items, its restaurant division, including the Burger King chain, has lagged. In the Minneapolis-based company’s most recent fiscal year, earnings plummeted 62%, to $69 million, on revenues of $6.2 billion, as the company closed nearly 100 restaurants and sold its Godfather’s Pizza chain.

But Pillsbury still looks appetizing to one investor. Last week Britain’s Grand Metropolitan, a brewing and restaurant giant (1987 revenues: $10 billion), made a surprise $5.2 billion takeover bid for the Doughboy’s company. Pillsbury is resisting the offer, but at $60 a share, it may be too good for stockholders to refuse. The bid sent Pillsbury stock, which had traded at less than $40, soaring $18 in one day.