General Mills Takeover Speculation Boosts Shares

An article from Bloomberg reported that shares of General Mills climbed to the highest level since June 2010 and options traders boosted bullish wagers on speculation that the maker of Cheerios cereal and Progresso soup may be acquired by Nestle SA. 

The shares climbed 0.8 percent to $38.21 as of 4 p.m. in New York, while the most-active bullish options were May $39 calls, which accounted for almost half of all bullish trades. The shares have climbed 7.4 percent this year.

“The call volume isn’t massive, but it’s piqued some interest,” says Jamie Lissette, founder of the Hammerstone Group, a Westport, Connecticut-based operator of online discussion forums for investors. “There’s been a lot consolidation in the food names recently, and people are thinking Nestle may come in and buy a large U.S. food company.”

There is increased options volume today amid “unsubstantiated takeover rumors,” according to a report from options strategists at Susquehanna Financial Group LLP.

Spokespeople for both General Mills and Nestle both declined to comment in the article.

“The Nestle-for-General Mills chatter won’t fade away,” said Alec Levine, a strategist at Wallachbeth Capital LLC. “It’s been previously speculated that Nestle may be interested, and these options are a cheap way to play that possibility.”

Click here to read the full Bloomberg article.