The US manufacturer and Unilever released a joint statement on Sunday (February 19), confirming Kraft’s intension to ditch the deal. They said: “Unilever and Kraft Heinz hereby announce that Kraft Heinz has amicably agreed to withdraw its proposal for a combination of the two companies.
“Unilever and Kraft Heinz hold each other in high regard. Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever.”
Kraft Heinz’s offer was made on a “friendly” basis, it said, although analysts claimed Unilever might have been slightly insulted by the proposed merger. Why? See Shore Capital’s comments below.
‘Did not wish to pursue a deal’
Kraft Heinz spokesman Michael Mullen said: “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.”
It was reported that Kraft Heinz thought a public battle to take over Unilever would likely have been subject to UK government scrutiny, according to insider sources. The US firm also didn’t expect such resistence from Unilever, sources told Reuters.
The US giant made a surprising bid for Unilever on Friday (February 17), in what would have been the third-biggest merger in history, and the largest acquisition of a UK-based firm, according to Thomson Reuters data.
‘Looking for a pretty knock-out deal’
Unite on the proposed deal
“Unite does not believe this takeover is either in Kraft Heinz workers’ interests or those of Unilever and that ultimately it will lead to jobs losses and poorer products for consumers.” – Rhys McCarthy, Unite
City analyst Shore Capital said it wasn’t surprised that Kraft Heinz’s initial offer was turned down. Speaking to FoodManufacture.co.uk before the joint statement, Shore Capital analyst Clive Black said: “I would’ve thought Unilever shareholders would be looking for a pretty knock-out deal before they decide to sell up, and I’m not sure a Kraft Heinz merger is what they were thinking of.
“I’d imagine Unilever feels somewhat embarrassed and marginally insulted by the fact that Kraft Heinz thinks it’s a complementary [partner]. I can understand Unilever being a bit put out, and potentially quite dismissive to the proposal – which they have been.”
Meanwhile, the deal’s abandonment will please Unite the union. On Friday, it warned that the deal would lead to job cuts and poorer product quality.
Unite national officer Rhys McCarthy said: “Kraft Heinz and their backers’ reputation for cost cutting, we believe, will lead to great brands being harmed through job cuts and a never-ending drive to push costs down.
This takeover bid, is we fear, driven by a desire for a growth in sales, not through product innovation and maintaining great brands, but by gobbling up a major competitor and slashing costs to generate a quick buck. Unite does not believe this takeover is either in Kraft Heinz workers’ interests or those of Unilever and that ultimately it will lead to jobs losses and poorer products for consumers.”
How the ditched deal hit the headlines
- ‘Unilever shares dive after Kraft Heinz abandons takeover bid’ – The Guardian
- ‘Unilever chief off the hook as Kraft Heinz abandons takeover’ – Financial Times
- ‘Kraft Heinz: How to lose a deal and irritate everyone’ – Telegraph.co.uk
- ‘Kraft Heinz has to settle for marinating Unilever’ – Reuters UK
- ‘Kraft Heinz to pursue merger despite Unilever rejection’ – CNBC