Tootsie Roll possesses many of the ingredients that make it a palatable buyout target, as several pros are well aware. The company certainly needs new energy to spark a lift in sales, earnings, and stock price. And Tootsie Roll's management hasn't displayed the skills to improve the company in the current environment of rising commodity prices and stiffening competition.
Add it all up, and there could be several companies or private equity groups interested in buying the company.
Tootsie Roll chairman and CEO Melvin Gordon is now 88, and his wife Ellen Gordon, the company's president and chief operating officer, is 76. They control some 76% of the class B voting stock and 54% of the common shares of the Chicago-based company, so the question of a hostile or unsolicited takeover at the Chicago-based company seems out of the question.
Nonetheless, it looks like a sale will happen, although the big question. The Gabelli organization has boosted its stake in Tootsie Roll, to 6.3% from 5.5% earlier this year. Other big shareholders include Wells Capital Management, with a stake of 9.5%, T. Rowe Price (TROW), which holds a nearly 5% position, and Barclays Global Investors (BCS), with 4.3%.