UPDATE: Unilever Confirms Rejection Of USD143 Billion Kraft-Heinz Bid

LONDON (Alliance News) - Anglo-Dutch consumer goods firm Unilever PLC ...

Alliance News 17 February, 2017 | 9:30PM
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LONDON (Alliance News) - Anglo-Dutch consumer goods firm Unilever PLC has rejected a takeover approach from US food company Kraft Heinz Co, the pair confirmed on Friday.

Kraft Heinz first noted recent speculation about a possible combination of the two groups and confirmed it had made an approach to Unilever about merging.

While Kraft Heinz said Unilever had declined its advances, it said it intends to continue working with the UK and Amsterdam-listed group on reaching a deal. It added there is no certainty a formal proposal will be tabled, however.

Kraft said combining the two groups will create a "leading consumer goods company with a mission of long-term growth and sustainable living".

Later on Friday, Unilever confirmed the approach. It said Kraft-Heinz had made a bid which valued Unilever at USD50.00 per share in cash and shares. The total bid valued Unilever at USD143.00 billion.

Unilever noted the proposal represents an 18% premium to its closing price on Thursday but said the Kraft-Heinz offer "fundamentally undervalues" its business. As such, Unilever said it sees "no basis" to hold further discussions with the US group.

Unilever owns a wide range of food brands, including Hellman's mayonnaise, Knorr stock cubes and Ben & Jerry's ice cream, while Kraft Heinz owns Heinz ketchup, Kraft macaroni and Philadelphia spreads. In 2010, Kraft purchased UK chocolate company Cadbury. The current group was formed in 2015 from the merger of US food groups Kraft and Heinz.

Shares in Unilever were up 12% at 3,755.50 pence on Friday, giving it a total group market capitalisation, including its Dutch arm, of GBP113 billion.

Kraft Heinz has a market capitalisation of USD107 billion, so a combination of the two companies would create a group with a combined market capitalisation of just under USD250 billion. That would make the combined group the biggest food company in the world by market cap, ahead of Switzerland's Nestle SA, which has CHF228 billion market value.

The size of the two companies would likely mean the deal would face significant regulatory hurdles from competition authorities.

Kraft Heinz counts famous US investor Warren Buffet and Brazilian investment firm 3G Capital amongst its investors. 3G also owns a stake in Anheuser-Busch InBev NV, the brewing giant which last year created a GBP280.0 billion drinks giant when it merged with London-listed SABMiller.

By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland and Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance

Copyright 2017 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Unilever PLC 4,514.50 GBX -0.02
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