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Davenport Sees Chance Of Higher Bid for Performance Food Group (PFGC)

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February 27, 2008 11:24 AM EST

Davenport is commenting on Performance Food Group Co. (Nasdaq: PFGC), which in January agreed to be acquired by an affiliate of The Blackstone Group for $34.50 per share. The firm sees the possibility of a higher bid.

Performance Food Group has until March 9th to solicit superior bids. Davenport said if you use the multiple paid for U.S. Foodserive in May 2007, PFGC would be valued at $45 per share.

Davenport is reiterating their Strong Buy rating and $40 price target. PFGC closed at $32.64 yesterday.

Here is a link to the Background of the Merger section of the proxy, which discusses the process of how they reached the $34.50 deal with Blackstone. Blackstone initially was willing to pay $38-$40 per share in cash for PFGC, but issues in the credit market, and potential liabilities they found in their due diligence process, led to the lower bid. There was also another private equity firm (PE Firm Y in the filing) and a strategic company (Company C inf the filing ) that was interested in acquiring Performance Food Group.