<THE DRIP PORTFOLIO>
Soup Owners Scammed?
S.O.S. Don't believe the message.
by Jeff Fischer (TMFJeff)
ALEXANDRIA, VA (May 12, 1999) --
There is a rat underfoot. It is feeding on Campbell Soup (NYSE: CPB). Campbell Soup shareholders, that is.
Campbell Soup investors are receiving a notice in the mail, either from a stockbroker or from the notifying company itself, stating that a tender offer for Campbell is afoot. A company by the name of Peachtree Partners is currently offering Campbell owners $32 per share to "relieve" them of their Campbell stock. That'd be quite a victory for Peachtree, seeing that Campbell is trading at $42 per share on open market.
What is this about? Most likely, it is a scam.
Peachtree Partners claims with its official mailing to homes across the country that it is trying to buy as much as 2% of Campbell Soup stock. To be involved, you can sell your shares to Peachtree for $32 apiece. Any half-awake Fool will laugh at the deal. The only way that a $32 tender offer could become attractive or even logical is if Campbell's fate goes cold, the stock falls below $32, and no recovery is in sight. Until that day, the deal -- at 24% below market price -- is a joke.
The sad part is that many unknowing investors will bite at the offer. Many investors won't know the current price of Campbell, or they'll be intimidated by the Peachtree documents and not know how to respond. You can bet that it's probably easier to send the mail back to Peachtree with a "Here are My Shares" option than it is to say, "No thanks. Beat It." The correct response, of course, is none at all. Throw it away. Fools on the Campbell Soup message board have done just that.
Here's an example of the offer, forwarded by a broker and posted by a Foolish reader. (Thank you to the Fool for posting, and thank you to other Fools who e-mailed me similar forms.)
Tender Offer - Voluntary Event
You must respond to this notification
[Bunch of details about my brokerage account and product
identifiers for CPB.]
Offer By: Peachtree Partners
32 USD per 1 of holdings
Do NOT tender
Peachtree Partners is offering to purchase up
to 2.0% of the outstanding shares at $32.00 per
share on a first-come, first-served basis.
Note the price is set by the offeror and may be
below current market prices.
[Form to fax back to broker with instructions
on whether or not to take the offer.]
I've read of similar deals in the past -- deals sent in the mail to shareholders offering to buy shares at below market prices. Typically the deals are looking to prey on unknowing investors. Typically, the deals are Wise to the core. Losers out there know that many people lack confidence or know-how when it comes to investment-related issues, issues that involve money and numbers, issues that involve the stock market. To capitalize on fears, deals like this one are created. Is it illegal? Not usually, unfortunately. It can be sometimes, though.
Then there are times, of course, when tender offers can actually help investors, but unless Campbell Soup is about to dry up, this doesn't appear to be one of those times -- at all.
I learned about the deal on the Fool's Campbell Soup message board, demonstrating another way that our online community can help investors. If you have thoughts or knowledge on Peachtree and this deal, please post them on the Campbell message board for everyone.
Thank you to the many Fools who posted about online banking. Many of you already bank online and shared your thoughts on the Drip Companies message board. I might begin online checking and bill payment through a discount broker I already use, combining the two into one convenient account. However, I'm undecided and I'll take more time and get involved in further discussion on the board. I'd like to try our own Mellon Bank (NYSE: MEL), if feasible.
(By the way, many investors argue that online discount brokerage stocks are overvalued, and they may be near term, but the companies have long-term opportunities to become online financial centers for customers, becoming much more than brokers.)
In our stock news, Campbell Soup (NYSE: CPB) volume has risen lately on very vague takeover rumors (no comment), while Johnson & Johnson (NYSE: JNJ) rose today after word that its rumored purchase of biotechnology company Centocor (Nasdaq: CNTO) is a no go, if it ever was.
For now, Fool on!
Make a Living Foolin' Around.