P&G, which brought back AG Lafley as CEO in May amid calls from investors to improve sales, could boost its share price by selling assets including the Iams division, said shareholder HighMark Capital Management Inc. Del Monte Foods is now a logical buyer of Iams, said Exane BNP Paribas, because the private-equity owned-company is seeking to expand its pet products business after agreeing this month to sell its canned peaches and corn division for $1.68 billion.
P&G is languishing at a cheaper profit multiple than 86% of peers, according to data compiled by Bloomberg. Selling Iams could fetch P&G about $2.5 billion, said Sanford C. Bernstein & Co. For Del Monte Foods, buying the unit would bolster its position in the $20 billion U.S. pet-food and treats industry, pushing it past Mars Inc. for the No. 2 spot in North America.
Neither P&G, nor Del Monte commented on the rumor.