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Kraft Heinz Pulls Surprise $143 Billion Bid for Unilever

Kraft Heinz Pulls Surprise $143 Billion Bid for Unilever


CHICAGO, IL & LONDON, ENGLAND
Friday, February 17th, 2017

U.S- based Kraft Heinz Co made a surprise $143 billion offer for London-based Unilever in a bid for the company, which was rejected on Friday. Both companies followed up with an announcement over the weekend that Kraft-Heinz pulled its bid and would not be making another by the March 17th deadline.

Originally, Kraft said it looked forward to “working to reach agreement on the terms of a transaction.” Most recent reports, however, note the company is pulling back from bid attempts. 

"Unilever and Kraft Heinz hereby announce that Kraft Heinz has amicably agreed to withdraw its proposal for a combination of the two companies," the companies said in a joint statement, according to Forbes. "Unilever and Kraft Heinz hold each other in high regard. Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever."

Unilever initially rejected the offer, according to a statement released Friday, stating the bid “fundamentally undervalues Unilever. Unilever rejected the proposal as it sees no merit, either financial or strategic, for Unilever's shareholders. Unilever does not see the basis for any further discussions."

Unilever said Kraft's proposal included $30.23 per share in cash, payable in U.S. dollars, and 0.222 of a share in a new enlarged entity per Unilever share and represented an 18 percent premium to its share price on Thursday, according to Reuters.

This combination, had it been made, is being reported to have the potential to be one of the most monumental takeovers in history, and the largest acquisition of a U.K.-based company, according to source Reuters. It would merge some of the world’s most popular brands from ice creams to tea, and combine Kraft’s dominance in the U.S. market with the strength of Unilever’s presence in Europe and Asia.

While Kraft is smaller than Unilever, with market value of $106 billion as of Thursday, it is 50.9 percent owned by Buffett’s Berkshire Hathaway and 3G Capital, which also controls Anheuser-Busch InBev. 3G has conducted major deals in the past known for upending the food and drink industry, including Anheuser-Busch InBev’s takeover of SABMiller and the combination of Kraft and Heinz.

Unilever shares rose to a record following news of the offer, which analysts have called a “seismic shock,” while closing 15% higher, short of Kraft’s $50 per share offer price, with the news lifting shares across the sector.

Kraft Heinz CompanyUnilever
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