Kraft Heinz Co. withdrew its $143 billion bid for Unilever two days after the approach became public amid stiff opposition from the Anglo-Dutch target to engage in discussions.
“Kraft Heinz’s interest was made public at an extremely early stage,” spokesman Michael Mullen said Sunday in an emailed statement. “Our intention was to proceed on a friendly basis, but it was made clear Unilever did not wish to pursue a transaction. It is best to step away early so both companies can focus on their own independent plans to generate value.”
Unilever last week rejected a $50-a-share buyout offer by Kraft Heinz, saying the proposal “fundamentally undervalues” the household-products maker. Kraft, which sells products like Velveeta and Jell-O, faced an uphill battle in trying to get Unilever to negotiate, with the latter’s management fretting behind the scenes about Kraft’s cost-cutting model and its lack of vision for cultivating brands, people familiar with the situation said.
Shares of Unilever jumped 13 percent to close Friday at a record 44.80 euros ($47.55) in Amsterdam. Kraft Heinz, based in Pittsburgh and Chicago, climbed 11 percent to a record in New York trading.
The quick withdrawal of Kraft’s offer is surprising because Unilever’s defenses, including its low ownership by management and other anti-takeover policies, weren’t very high, said Ken Shea, a senior analyst at Bloomberg Intelligence. Kraft’s dealmaking credibility may take a hit going forward, he said.
“The strange episode suggests that Kraft Heinz acted a bit hastily with its takeover plan, and evidently did not think it fully through,” Shea said Sunday. “Also, the timing and size of the bid — coming just after its earnings conference call on Wednesday last week, in which it downplayed the need for acquisitions — likely leaves their Wall Street credibility diminished.”
The proposed deal, which would have been the largest-ever takeover in the food or beverage industry, would have created a company with combined sales of $84.8 billion last year, second only to Nestle SA.
“Unilever and Kraft Heinz hold each other in high regard,” the companies said in a joint statement Sunday. “Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever.”
(c) 2017, Bloomberg ยท Devin Banerjee
