Commentary - 06/04/2008

Procter&Gamble Lures Smucker With Folgers

Here's the latest headline:
Smucker to buy P&G's Folgers in $3 bln stock deal

CHICAGO (Reuters) - J.M. Smucker Co will acquire Folgers, the largest U.S. coffee business, from Procter & Gamble Co for stock in a deal valued at $2.95 billion, the companies said on Wednesday.
Sounds pretty straight forward, no? However, the very next paragraph tells all.
The deal will give P&G shareholders a 53.5 percent stake in Smucker, known for its namesake jellies and jams and which also makes Jif peanut butter and Crisco shortening, brands it acquired from P&G in 2002.
Last I heard, owning over 50% of the shares in a public company means control. It seems more and more of our corporations are becoming "plantations" of the largest corporations that have fewer folks controlling ever larger numbers of shares. If you take a look at J. M. Smucker below, at least the insiders still have 7% interest in that corporation. However, you can also see that with only 3% of the institutional holders controlling over 40% of Smuckers, you can pretty well guess which way things were going to go anyway. Just another technique of taking over a public corporation.

If you look at Procter&Gamble, you can easily see that NO ONE on the inside has even 1%. That means top management answers only to the top Major Holders, whatever their plans may be, which may not be in the interest of the other lesser shareholders. Procter&Gamble is a pure plantation with 1493 institutions sharing ownership, with slightly more than one-half of one percent of those institutions controlling over 30% of P&G. Wow! You can select previous years and see how the Top 10 and Barclays/Associates have gained more control of Procter&Gamble recently. You will also see that insiders have been squeezed out from 4% to zero.

The article goes on to say:

"We believe that the structure of this deal is a positive for investors, as it gives P&G shareholders a stake in Smucker, as opposed to a small orphan stock, as would have been the case if Folgers had been spun-off as a stand-alone company," Citigroup household and personal care products analyst Wendy Nicholson, said in a research note.
A positive for which investors? At least the news article spells it out, but take a look at Citigroup, the company the analyst works for, to see their own Top 10 Major Holders. See familiar names? The financial world is certainly getting smaller and smaller, and more controlled by fewer folks.

Perhaps this is why: Sometimes The Dragon Wins


Name Of Corporation
SJM

Major
Holders
J M Smuckers (As of 31-Mar-2008)
Top 10 Institutional HoldersShares2008Value2007
Ariel Investments, LLC5,308,4699.55%$268,661,616-.--%
Barclays Global Investors UK Holdings Ltd4,221,3217.59%$213,641,055-.--%
Allianz Global Investors of America L.P. (Munich, Germany)1,770,7653.19%$89,618,416-.--%
Vanguard Group, Inc. (The)1,559,3472.81%$78,918,551-.--%
Dimensional Fund Advisors Inc1,069,2931.92%$54,116,918-.--%
State Street Corporation1,054,3231.90%$53,359,287-.--%
Dreman Value Management, LLC918,8001.65%$46,500,468-.--%
Deutsche Bank Aktiengesellschaft (Frankfurt, Germany)763,7981.37%$38,655,816-.--%
Bank of New York Mellon Corporation762,9121.37%$38,610,976-.--%
Security Investors, LLC450,400.81%$22,794,744-.--%
% of Shares Held by All Insider and 5% Owners:7%-.--%
Top 10 [3.1%] of 326 Institutional Holders Control32.16%-.--%
Percentage of Barclays and "Associates" Control10.86%-.--%
NOTE: Ariel Investments manages a fund that controls 4.35%.
Vanguard manages three funds that control 2.03%.
Allianz manages a fund that controls 1.65%.
Therefore, the TOP 10 Major Holders control 40.19% of Smuckers.
Ariel controls 13.90%.

Symbol Name Of Corporation
PG

Major
Holders
Procter Gamble Company (As of 31-Mar-2008) (As of 30-Jun-2007)
Top 10 Institutional HoldersShares2008Value2007
Barclays Global Investors UK Holdings Ltd128,497,7444.21%$9,003,836,922-.--%
State Street Corporation107,526,0983.52%$7,534,353,686-.--%
Berkshire Hathaway, Inc105,847,0003.47%$7,416,699,290-.--%
Vanguard Group, Inc. (The)95,725,9423.14%$6,707,516,755-.--%
FMR LLC (Fidelity)78,005,8832.56%$5,465,872,221-.--%
Northern Trust Corporation48,116,3001.58%$3,371,509,141-.--%
Bank of New York Mellon Corporation48,106,7911.58%$3,370,842,845-.--%
AXA (Paris, France)35,693,0931.17%$2,501,015,026-.--%
Janus Capital Management, LLC35,280,0161.16%$2,472,070,721-.--%
Bank Of America Corporation32,278,5841.06%$2,261,760,380-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [0.6%] of 1493 Institutional Holders Control26.59%-.--%
Percentage of Barclays and "Associates" Control13.11%-.--%
NOTE: Vanguard manages four funds that control 2.46%.
Fidelity manages two funds that control 1.03%.
Therefore, the TOP 10 Major Holders control 30.08% of Procter Gamble.

© 2008 by Edward Ulysses Cate
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