Food giant scraps bid to buy PG Tips and Marmite f irm
KRAFT Heinz has dropped its £ 115billion plan to buy Marmite- maker Unilever, which critics feared might lead to price rises and job cuts.
The merger would have been the second biggest takeover in corporate history, combining dozens of household names.
But Kraft Heinz, the global food firm behind Heinz Tomato Ketchup and Philadelphia cheese, decided against making a second offer after i ts ‘comprehensive proposal’ was rejected by Unilever, t he British- Dutch consumer goods giant.
In a joint statement, the companies said: ‘Unilever and Kraft Heinz hereby announce that Kraft Heinz has amicably agreed to withdraw its proposal for a combination of t he t wo companies. Unilever and Kraft Heinz hold each other in high regard.’
The decision will be a relief to Unilever’s 7,500 staff in the UK, who had feared that jobs would have been slashed if the deal had gone ahead.
The private equity f i rm behind Kraft is an aggressive cost-cutter led by the Brazilian billionaire Jorge Paulo Lemann, who has previously axed jobs after takeovers.
But the attempted takeover of Unilever, whose other brands include Ben & Jerry’s ice cream, Dove soap, Hellmann’s mayonnaise and PG Tips tea, will be seen as a warning to Theresa May about the limits of protecting British manufacturing interests.
The Prime Minister promised last year to do more to block predatory takeovers when British jobs are at risk, saying: ‘Workers have a stake, l ocal communities have a stake and often the whole country has a stake.’
She faces a further test of her promise with plans by French car maker PSA to take over General Motors’ European operation Opel, which includes Vauxhall of the UK.
Former business secretary Vince Cable welcomed the news that the Unilever deal was off, but warned that similar takeovers are more likely since the fall in the pound.
‘ There remains a strong argument for the Government to tighten up the public interest test for takeovers, given the problem will recur,’ he told the Financial Times.
If the Unilever deal had gone ahead, it would have been the s econd- biggest t akeover in history, behind only the £147billion swoop on Germany’s Mannesman by Vodafone in 2000.
It would also have brought dozens of the biggest household name brands under one roof, giving it huge power to dictate the prices charged to shoppers.
And it would have ignited fears over the future of British j obs i nvolved i n making Unilever products.
The f i rm has i ts headquarters i n London and research facilities at Port Sunlight on Merseyside, Colworth in Bedfordshire and Leeds.
But s ome experts had already pointed out that the deal could have been scuppered by Dutch regulations which say that takeover bids cannot be judged only on price.
The previous merger between Kraft and Heinz was swiftly followed by 700 job l osses at Kraft’s f ormer c or porate headquarters in Chicago.