Hos­tile Re­cep­tion Forced Kraft to Back Out of Unilever Bid

The Economic Times - - Around The World -

Lon­don: Kraft Heinz Co’s rapid re­treat from its sur­prise $143-bil­lion bid for Unilever in the face of stiff re­sis­tance knocked the An­glo-Dutch com­pany’s shares on Mon­day as in­vestors as­sessed the im­pact of the failed ap­proach.

Kraft,whichis­backed­byWar­ren Buf­fett and the pri­vate eq­uity firm 3G, wanted to buy Unilever as part of its strat­egy to be­come a global con­sumer goods giant by buy­ing com­peti­tors and cut­ting costs and jobs to drive prof­its. How­ever, the US food group had not fac­tored in Unilever CEO Paul Pol­man dis­miss­ing its of­fer as hav­ing no fi­nan­cial or strate­gic merit and re­fus­ing to come to the ta­ble.

The ve­he­mence of this re­sponse, along with fears of a po­lit­i­cal back­lash, was enough to put off 86year old Buf­fett, whose Berk­shire Hath­away­has a long-held aver­sion to mak­ing hos­tile bids, sources told Reuters. “Kraft didn’t re­alise how hos­tile their ap­proach would be per­ceived,” one source said.

A source close to Kraft said its of­fi­cials alerted Bri­tain’s Busi­ness Sec­re­tary Greg Clark in a brief call on Fri­day soon af­ter it made its ap­proach pub­lic. Kraft laid out its plan to cre­ate a con­sumer goods be­he­moth with head­quar­ters in the United States, Bri­tain and the Nether­lands and promised to keep Down­ing Street in­formed on any de­vel­op­ments.

For Kraft, Bri­tain’s re­sponse was a ma­jor con­cern af­ter Prime Min­is­ter Theresa May sig­naled she would take a more proac­tive ap­proach to for­eign takeovers, sources told Reuters.

May, who had pre­vi­ously sin­gled out Kraft’s 2010 ac­qui­si­tion of an­other Bri­tish house­hold name, Cad­bury Plc, as an ex­am­ple of a deal that should have been blocked, had in­di­cated her gov­ern­ment would want to ex­am­ine the deal if it went ahead, ac­cord­ing to a per­son fa­mil­iar with the sit­u­a­tion. How­ever, a spokesman for May said on Mon­day the gov­ern­ment had not been in­volved in Kraft’s de­ci­sion to pull its pro­posal. “The is­sue of the with­drawal from the Unilever deal by Kraft is an is­sue youshould­put­toKraft.Num­ber10 wasn’t in­volved in it,” the spokesman told re­porters.

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