Unilever has rejected takeover bid from one of its major competitor US food company Kraft Heinz saying the deal lacks any financial or strategic merit. Kraft Heniz made an offer of $143bn to buy UK based Unilever, one of the world’s most popular brands. But Unilever considers this $50-a-share offer to be undervalued and has asked shareholders to take no action.
Meanwhile industry experts believe that Kraft Heinz will come back with a better bid as the company said it is “working to reach agreement on the terms of a transaction”. The surprise takeover, if materializes would be the third-biggest buyout in history and the biggest ever procurement of a UK-based company.
Unilever has a strong presence in the European and emerging markets, whereas Kraft Heinz is predominantly stronger in the North American market, which accounts for more than 80 percent of its sales. The takeover bid comes at a time of Britian’s decision to leave EU, when the country is hit by inflation and the market expecting severe price hikes.
Interestingly, Kraft is comparatively smaller company than Unilever with a market value of $106bn. But more than half of its shares are owned by billionaire Warren Buffett’s Berkshire Hathaway and 3G Capital, the private-equity firm that also controls Anheuser-Busch InBev.
Unilever disclosed that Kraft’s proposal included $30.23 per share in cash, payable in US dollars, and 0.222 of a share in a new enlarged entity per Unilever share.