Price rise fears as £115bn is bid for brands

DOZENS of major household brands could become more expensive under a proposed £115billion takeover of Marmite-maker Unilever.

The deal with US giant Kraft Heinz could also lead to huge job cuts, experts fear.

Kraft, which makes Heinz Baked Beans and Ketchup as well as HP Sauce, was yesterday revealed to have made a surprise offer for its British-Dutch rival.

Unilever rejected the bid, which would have been the second biggest takeover in history. But it is believed the Americans will return with an even bigger offer.

The deal would bring dozens of the biggest names in British supermarkets under the ownership of one firm, giving it huge bargaining power to dictate prices.

It would ignite fears over the future of thousands of British jobs involved in making Unilever products.

Kraft owned chocolate maker Mondelez during its controversial takeover of Cadbury in 2010. It promised to safeguard jobs, only to shut Cadbury’s historic factory near Bristol weeks after the deal was completed.

David Buik, market commentator at stockbroker Panmore Gordon, warned that a takeover of Unilever could lead to heavy cost-cutting by the new owners.

He said: ‘What worries me with Kraft is they are ruthless. There would be massive redundancies. It would be mind-blowing.’

Neil Wilson, an analyst at ETX Capital, warned that the deal would create a giant consumer brand with huge clout when negotiating with supermarkets.

He said: ‘The combined entity would... be able to flex bargain muscles even more.’

Unilever is one of the biggest firms on the UK stock market. It employs 168,000 people globally and is responsible for 400 brands, including Wall’s ice cream, Flora spread, Lynx deodorant and Pot Noodle.

If the firm were taken over it would be the latest leading British company snapped up by foreign buyers.

Pioneering tech firm ARM Holdings was taken over by Japan’s SoftBank last year, and the London Stock Exchange is in the midst of a takeover by German rival Deutsche Borse. Unilever and Chicago-based Kraft Heinz are already global giants with huge bargaining power when setting prices.

Last year, Unilever flexed its muscles by attempting to get Tesco to raise prices by 10 per cent following the fall in the pound.

On that occasion – dubbed ‘Marmitegate’ – Tesco finished victorious. But many other supermarkets have since hiked their prices.

If Unilever and Kraft Heinz combined it would give them even more power to dictate prices as they would control the supply of many brands on the High Street.

Last month Unilever chief executive Paul Polman said shoppers should ‘get used’ to price rises after sterling’s collapse.

Retail analyst Richard Hyman said: ‘Will the retailers have to take a bigger hit if the merger goes through? Probably yes. If the big four supermarkets put their prices up they are going to lose a bit of market share to German discounters Aldi and Lidl.’

A takeover could also put out of business thousands of smaller suppliers who have gained a foothold in bigger stores in recent years. If they posed a threat, the newly-created giant would be able to undercut them.

Lib Dem leader Tim Farron criticised blamed the takeover bid on Brexit, saying: ‘The Government’s industrial strategy has been undermined by its determination to leave the single market.’

Kraft said: ‘While Unilever has declined the proposal, we look forward to working to reach agreement in the terms of the transaction.’

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