Unilever spurns Kraft’s $143B bid

Kraft Heinz made a surprise $143 billion offer for Unilever in a bid to build a global consumer-goods giant, although it was flatly rejected on Friday by the maker of Lipton tea and Hellman’s mayonnaise.

A combination would be the third-biggest takeover in history and the largest acquisition of a UK-based company, according to Thomson Reuters data.

It would bring together some of the world’s best-known brands, from toothpaste to ice creams, and combine Kraft’s strength in the US with Unilever’s in Europe and Asia.

The global packaged food industry is grappling with slowing growth, new competition from upstart brands, deflation in developed markets and more health-conscious consumers.

Although Kraft, which is controlled by Warren Buffett and private equity firm 3G Capital, said it looked forward to talking terms, Unilever said it saw no reason to discuss the proposed deal.

In its offer, Kraft sought to provide assurances over maintaining its culture of innovation, recognizing that this requires investment, and acknowledged that there are limits to cutting costs, a source familiar with the bid said.

Kraft has also offered to keep three headquarters for the combined company in the US, Britain and the Netherlands, the source added.

Kraft expects the combined company to be well-capitalized, so that its debt will be rated investment-grade, the source said.

Kraft has until March 17 to make a final bid for Unilever under UK takeover rules.

Unilever’s ADRs spiked 14 percent, to $48.53, on news of the offer. Kraft Heinz shares rose 10.7 percent, to $96.65.