“A tie-up with Kraft Heinz would enable it to continue to improve profits in the same way”, Jonathan Bell, chief investment officer at Stanhope Capital, said in an email.
Advertisement
Kraft Heinz went public with its approach to Unilever last week, making an offer reportedly worth $143bn (£115bn), in what could have become one of the largest M&A transactions in history. Unilever employs 169 thousand people, while Heinz has about 42 thousand employees. Bernardo Hees, a 3G partner, has slashed jobs and pursued other savings, some of them granular, as CEO of Kraft Heinz.
The Financial Times reported that British Prime Minister Theresa May had asked officials to examine the merger.
Kraft Heinz is the fifth-biggest food and beverage company in the world and the third-biggest in North America.
Kraft Foods cut 200 jobs from Cadbury’s production site in Bournville and a further 400 at Keynsham as production was moved overseas.
Besides strong resistance within Unilever, it had been suggested over the weekend that two external factors would come to the aid of the company and spare the Government’s blushes. A deal would have brought together two companies with radically different business cultures.
Several analysts believe that the reason behind Kraft Heinz’s decision to simply drop the takeover bid was the current political environment in Britain, which is now against foreigners making bids for large United Kingdom companies, even for the half-Dutch Unilever.
Unilever’s brands include Domestos, Dove and Persil.
The potential offer for all of the shares of Unilever represented a premium of 18 percent as at the close of business on February 16.
‘While this bid appears to have fallen at the first fence it undoubtedly keeps the focus on a sector that could see further consolidation’. The unusually strong rejection meant the United States group faced an uphill battle to strike a deal.
Kraft spokesperson Michael Mullen said that while the company had meant to “proceed on a friendly basis” for the acquisition, “it was made clear Unilever did not wish to pursue a transaction”.
It is understood the resistance from Unilever was unexpected by Kraft but key concerns during the talks had included differences between corporate culture and potential United Kingdom government scrutiny.
Advertisement
Shares in Unilever dropped 6.90% to 3,536.50p in early trading. Kraft is not expected to return.
