Unilever rejects Kraft takeover bid

Unilever, whose brands include Marmite and PG Tips, has turned down a takeover offer from US food giant Kraft Heinz.

But Kraft, which makes Heinz ketchup, indicated it would continue working towards striking a deal.

Shares in Anglo-Dutch giant Unilever surged more than 11% in London, but the firm said it saw “no merit, either financial or strategic” in the bid.

The deal would be one of the biggest in corporate history, with Unilever currently valued at more than £100bn.

Unilever, which also makes Ben & Jerry’s ice cream, Dove soap, and Hellmann’s mayonnaise, said the offer from Kraft “fundamentally undervalued” the company.

“Unilever does not see the basis for any further discussions,” it added.

Kraft said it had made “a comprehensive proposal” and looked “forward to working to reach agreement on the terms of a transaction”.

With so many brands, a combined Kraft-Unilever would be in a stronger position to raise prices, said Neil Wilson, an analyst at London broker ETX Capital.

“The combined entity would have a huge brand footprint and be able to flex bargain muscles even more with supermarkets,” Mr Wilson said.

Competition regulators were likely to scrutinise any deal to combine the two companies, he said.

“It could come up against a number of hurdles as it would create a giant in the sector. EU regulators in particular could be against it.”