dglobalnews.com Following Rejected Bid, Kraft Heinz May Look To Acquire Unilever Food Brands
Published: Sat, February 18, 2017
Markets | By Armando Jensen

Following Rejected Bid, Kraft Heinz May Look To Acquire Unilever Food Brands

The London-based company employs 172,000 people worldwide.

Kraft Heinz Co.'s plan to swallow Unilever PLC with a $143 billion offer doesn't just face opposition from Unilever, which quickly said "no thanks" on Friday.

Susquehanna Downgrade its coverage for The Kraft Heinz Company (NASDAQ:KHC) in a note sent to investors on 16-Feb-17. The Company is engaged in the manufacturing and marketing of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. The company rejected the offer, saying it was too low.

"The approach by Kraft-Heinz is a total surprise".

The Kraft Heinz Company (KHC) have shown a high EPS growth of 24.30% in the last 5 years and has earnings decline of -318.40% yoy.

Kraft Heinz, which is listed on the USA stock market, has an estimated value of £85bn while Unilever is thought to be worth around £101bn. Similar statistics are true for the second largest owner, Vanguard Group Inc, which owns 40,564,316 shares of the stock are valued at $3.7 billion.

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"It would also signal further consolidation in the sector as makers of consumer goods push for more space in the public's shopping carts", the Times added. The deal has to come to fruition in a month, or they can not pursue a deal for about a year.

And while Unilever grew sales and passed on price increases in all of its markets outside of Europe last year, Kraft wasn't able to manage year-on-year expansion in any, although stripping away currency changes gave it organic sales growth in Canada and its "Rest of World" segment. There had been speculation that 3G would look to purchase another food company and resume a cost-cutting cycle spearheaded by Bernardo Hees, chief executive officer. It was formed by the 2015 merger struck between Heinz's controlling shareholders, U.S. billionaire Warren Buffet's Berkshire Hathaway, and 3G Capital of Brazil.

Unilever shares rose almost 15 percent on the news, now trading up 13.76 percent at 3,808.62 (1348GMT). This fundamentally undervalues Unilever.

Unilever is adamant and said it saw no reason to discuss a deal which it said had no financial or strategic merit.

Further, while Unilever owns several major food brands, including Hellmann's, Lipton and Ben & Jerry's, its largest business is the personal care category.

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