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Report: Heinz Could Become Takeover Target

Financial publication Barron's said the ketchup maker could become an acquisition target once credit markets improve.

MILWAUKEE (AP) -- Shares of H.J. Heinz Co. rose on Monday after financial publication Barron's said the ketchup maker could become an acquisition target once credit markets improve.

Barron's said in an issue over the weekend that the Pittsburgh-based company known for its namesake ketchup and other sauces could get $60 to $70 a share for a takeover, far above the $36 the stock has been trading at recently.

On Monday, shares rose $1.04, or 3 percent, to end at $36.10.

Heinz could become a target in the next few years of Kraft Foods Inc., Nestle SA, or Unilever, Mark Boyar, head of New York investment and research firm Mark Boyar & Co. told Barron's. But he said given the tight credit markets amid the recession, it was unlikely there would be a deal soon.

Barron's said Heinz has a high dividend yield and is trading at 12 times its estimated profits for the current fiscal year and the next year, putting it at a discount to competitors like Kellogg Co., General Mills Inc. and Kraft. The company also has a market-leading trove of brands, including Ore-Ida and Weight Watchers Smart Ones products, in addition to its sauces.

Heinz and other food makers are benefiting as consumers eat more at home, rather than in restaurants, to save money.

But there is risk of consumers trading down to less expensive, private-label brands. The company has been boosting its marketing, and even recently changed its top-selling ketchup label, replacing the gherkin -- which had been on the bottle for more than 110 years -- with a vine-ripened tomato to play into consumers' desire for more natural, wholesome foods. The company plans a large marketing campaign this spring to highlight the change.

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