Kraft Heinz spurned in $143b Unilever bid

Unilever says it doesn’t see a basis for further discussions following $50-a-share proposal, two-thirds of it in cash

Kraft Heinz Co. made a $143 billion (Dh524.81 billion) offer for Unilever, attempting the largestever takeover in the food or beverage industry to create a consumer-goods giant with household names from Dove soap to Heinz ketchup.

Unilever said yesterday it rejected the $50-a-share proposal, comprising about twothirds in cash and a third in new stock. The approach “fundamentally undervalues” the company, Unilever said, adding that it doesn’t see a basis for further discussions.

Kraft Heinz said earlier it would seek to gain an agreement on the terms of a transaction.

Unilever shares surged as much as 15 per cent to a record in London, valuing the maker of Hellmann’s mayonnaise at more than £113 billion (Dh514.15 billion, $140 billion). The stock gained as much as 12 per cent in Amsterdam, while Kraft Heinz gained about 4.7 per cent in premarket trading in New York.

A deal would mark a major step-up in industry consolidation following this week’s $16.6 billion agreed offer for baby-formula maker Mead Johnson Nutrition by Reckitt Benckiser Group. 3G Capital, the private-equity firm that runs Kraft Heinz, is under pressure to either do another major deal or show the company can boost sales.

“Kraft Heinz will not have led with its best offer and a protracted negotiation probably lies ahead,” said Paul Hickman, an analyst at Edison Investment Research.

Unilever said the proposal was at an 18 per cent premium to Thursday’s closing share price. Berenberg analysts said such a valuation would imply multiples of 3 times sales and 21 times earnings, “which strikes us as very low.”