Kraft Heinz abandons Unilever bid

Article by Staff Writer

KRAFT HEINZ has abandoned its takeover of Unilever, walking away from what would have been one of the largest deals in history just two days after the bid was announced.

In a joint statement issued on Sunday, the companies announced: “Unilever and Kraft Heinz hereby announce that Kraft Heinz has amicably agreed to withdraw its proposal for a combination of the two companies.”

The BBC reports that Kraft Heinz was shocked at the “vehemence” with which its friendly offer was rebuffed by Unilever, and realising that any takeover would have to be hostile, withdrew its bid.

There appear to be a number of factors contributing to the deal’s sudden collapse. Kraft Heinz said in a separate statement that news of the deal leaked to the Financial Times was made public at “an extremely early stage”.

A source told the newspaper that Kraft Heinz was prepared to make a lot of concessions on the deal, including keeping Unilever’s name and substantially increasing its offer, but the news of the deal leaked too early and made it hard to negotiate.

“Our intention was to proceed on a friendly basis, but it was made clear Unilever did not wish to pursue a transaction,” Kraft Heinz said in a statement.

It has also been suggested that the UK government’s quick involvement in the deal may have spooked Kraft Heinz. Prime Minister Theresa May asked officials to look into the deal to review whether the government needed to intervene, the Financial Times reports. May has previously cited Kraft’s takeover of Cadbury in 2010 as a deal that should have been blocked, after the US firm quickly rowed back on promises not to close the Somervale plant near Bristol.

Kraft Heinz, which has been formed out of a number of debt-fuelled mergers, has gained a reputation for its detached approach to cutting costs and the effect it has on jobs and plant. Meanwhile, Unilever is better known for a kinder approach with a commitment to corporate social responsibility and the environment, even if it comes at the cost of profits.

The pair said they hold each other in high regard, and Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever.

If a deal had been possible, it would have brought together some of the most well known brands in consumer goods, including Kraft’s Heinz Ketchup, Philadelphia and Kool-Aid with Unilever’s PG Tips, Wall’s ice cream and Marmite.

Together the pair would have formed the second largest consumer goods company after Nestle, and with Unilever’s value climbing to £112bn (US$139bn) on the announcement of takeover talks, it’s expected the deal would have been the second largest in corporate history after Vodafone’s US$183bn takeover of Mannesmann in 2000.

Article by Staff Writer

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