Unilever slumps as Kraft Heinz pulls bid; U.S. markets shut for holiday

Feb 22, 2017, 00:36

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".

Kraft Heinz planned to buy its bigger rival, combining two of the world's largest packaged food and consumer goods companies, but Unilever flatly rejected the offer on Friday.

Henderson Group Plc's John Bennett, who oversees more than $12 billion, is betting that a failed bid for Unilever may lead the owner of brands like Ben & Jerry's ice cream and Dove soap to consider selling some of its assets. Its top US food brands include Knorr, Hellmann's and Lipton.

The two companies said in a press release they hold each other in high regard and that Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever.

Analysts say Kraft Heinz, co-headquartered in Chicago and Pittsburgh, is still in the market for acquisitions.

Heinz purchased Kraft in a previous mega-deal in 2015.

(NYSE:HNZ) interest was made public at an extremely early stage, said company's spokesman Michael Mullen in a statement.

People familiar with the talks at the weekend said 3G and Berkshire decided Unilever's negative response made a friendly transaction impossible, Bloomberg reported.

Unilever has a track record of investing in sustainable and ethical business, while Kraft Foods - one of the two constituent parts of Kraft Heinz - was criticised in the United Kingdom following its successful takeover bid for Cadbury in 2009. Unilever said the deal "fundamentally under values Unilever" and has "no merit, either financial or strategic, for Unilever shareholders".

The company's stock plummeted, even though most of the European indices opened on a bullish note, due to Kraft Heinz's most recent announcement stating that the company is withdrawing their initial acquisition proposal for Unilever, which was rejected by the latter right away upon the proposal's announcement.

Kathleen Brooks, research director at City Index Direct, said: "We expect the chief reason to drop the bid was concern about the political atmosphere in Britain, which is now against foreigners making bids for "national treasures", even half-Dutch ones like Unilever".

Kraft Heinz's stock (NASDAQ: KHC) climbed 10.74% or $9.37 at $96.65 in the market, reaching a high of $97.77 with a market cap of $112.72 billion and dividend yield of 2.48%.

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