That’s not Heinz, after all
Unilever shares plummet after $143B mega-deal is abruptly shelved
NEW YORK — Only two days after proposing one of history’s biggest corporate mergers ever, consumer giant Kraft Heinz on Sunday abruptly called off its pursuit of Unilever.
News that the proposed $143-billion US deal, what would have been the third-largest of all time, was kaput came in a terse joint statement from the two companies. It said that Kraft Heinz “had amicably agreed to withdraw its proposal for a combination of the two companies.”
Even though Kraft Heinz’s offer had been unsolicited and could have set up a fight for control of Unilever, the statement dripped with pleasantries and assurances of mutual respect.
“Unilever and Kraft Heinz hold each other in high regard. Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever,” it read.
Rather than embracing Kraft Heinz’s offer Friday, Unilever didn’t take long to reject it based on price alone. Kraft Heinz’s offer “fundamentally undervalues” the company, Unileversaid at the time.
Plus, it said, it “sees no merit, either financial or strategic, for Unilever’s shareholders. Unilever does not see the basis for any further discussions,”
The statement dashed Kraft Heinz’s hopes that Unilever would quickly come around to its point of view.
Shares in Unilever fell 6.5 per cent Monday to 41.91 euros in Amsterdam after jumping 14 per cent Friday. Wall Street was shut Monday for the U.S. Presidents’ Day holiday
The deal would have united two companies that make dozens of products that millions of people depend on every day, even if the two companies weren’t seeing staggering growth.
Kraft Heinz makes Oscar Mayer luncheon meats, Philadelphia spreads and Maxwell House coffee, among other things. Unilever’s brands include Dove soap, Lipton tea and Best Foods/Hellman’s mayonnaise.
The deal would have been eclipsed only by two past mergers: Mannesmann-Vodafone and Time Warner-American Online, according to S&P Global Market Intelligence.
Analysts say Kraft Heinz, coheadquartered in Chicago and Pittsburgh, is still in the market for acquisitions. The fact that it bid for all of Unilever and not just its food business indicates that Kraft Heinz is potentially open to acquiring other packaged consumer goods.
Such acquisitions might not lead to big changes that customers would notice on supermarket shelves, but shifting tastes are partly driving dealmaking in the food industry.
Part of the challenge is the proliferation of smaller food makers marketing products that seem more wholesome, which makes it harder for the established companies to drive up sales simply by selling more of wellknown products or by raising prices, as they have in the past.
Instead, major packaged food companies are being forced to dig deeper to find cost efficiencies or tap into new markets. That can include mergers that result in consolidated manufacturing systems, or that give companies access to distribution networks.