Tootsie Roll Industries a possible takeover target ?

According to a report in Businessweek, investors in Tootsie Roll Industries, disappointed with flat sales and declining stock value, have expressed interest in a buyout from other major confection companies. Since 2000, sales and earnings at the 100-year-old maker of chewy chocolate have been flat, and the stock has sagged to 30, down from 33.62 on Dec. 31.


"It is a brand name that would enhance any buyer," says Robert Stovall of Wood Asset Management, which owns shares. With its vast distribution and brand recognition, it would be a "great catch" for the likes of Nestlé, Hershey, or Wrigley," says Stovall. Elliott Schlang of researcher LJR Great Lakes Review says takeover talk gets louder as investors get disappointed with the stock -- and as top execs get older. Tootsie Chairman and CEO Melvin Gordon is 85, and his wife, Ellen, president and COO, is 73; they own 40% of the stock and control 77% of the voting B stock. "The question is when and how much they ll ask for," Schlang says. He notes the balance sheet is solid, with understated assets, such as plants and real estate in several states, such as Illinois and Tennessee. He says the stock is worth 35 to 37 in a deal -- having hit 44 in 2001.