Unilever snubs Kraft’s £115bn
UNILEVER has snubbed a mouthwatering £115billion takeover approach from US food giant Kraft Heinz.
Shares in the FTSE 100 consumer products outfit, one of Britain’s biggest companies whose brands range from Persil and Dove to Marmite and Lipton, jumped 449½p to a 3797p high in anticipation of a sweetened offer from the producer of Heinz ketchup, Philadelphia cheese and Maxwell House coffee.
Kraft Heinz, backed by legendary investor Warren Buffett and Brazilian private equity group 3G Capital, said it had made a “comprehensive proposal about combining the two groups to create a leading consumer goods company with a mission of long-term growth and sustainable living”.
The cash and shares proposal, pitched at an 18 per cent premium to Unilever’s previous closing share price, was dismissed as “fundamentally undervaluing” the business. Unilever, led by chief executive Paul Polman, saw “no merit, either financial or strategic” for its shareholders, and no basis for further discussions.
But Kraft Heinz, which has until March 17 to announce a firm intention to bid or walk away, has not yet given up hope of one of the biggest deals in corporate history. It said: “We look forward to working to reach agreement on the terms of a transaction. There can be no certainty that any further formal proposal will be made or that an offer will be made at all or as to the terms of any transaction.”
Kraft bought Cadbury in 2010 before spinning off its global snacks business including the chocolate maker into a separate company, Mondelez, to focus on US grocery products. It merged with Heinz in 2015 to create the world’s fifth biggest food and drinks firm with £20 billion annual sales. Its market value is lower than Unilever at £85 billion and the Anglo Dutch group’s workforce is four times bigger at 170,000. Hargreaves Lansdown’s Steve Clayton said: “Kraft Heinz are attempting a massive push on the fast forward button. To acquire the sheer scale of brands that Unilever represents through one-off acquisitions could take decades. With debt cheap and abundant right now, Kraft have spotted their opportunity.
“To win over Unilever’s shareholders Kraft Heinz will need to dig very deep.”