Why Kraft Heinz ditched $143bn Unilever takeover

Business

Kraft Heinz withdraws offer to take over Unilever amid concerns over British jobs

U.S. food company Kraft Heinz has agreed to withdraw its proposal for a $143 billion merger with larger rival Unilever Plc., the companies said on Sunday. Kraft had made a surprise offer for Unilever in a bid to build a global consumer goods behemoth, although it was flatly rejected on Friday by Unilever, the maker of Lipton tea and Dove soap.

Kraft withdrew its offer because it felt it was too difficult to negotiate the deal following the public disclosure of its bid so early, according to people familiar with the matter who requested anonymity to discuss confidential deliberations.

[Our] interest was made public at an extremely early stage. 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.

A spokesperson for Kraft Heinz

Kraft was forced to publicly disclose its offer to Unilever on Friday to comply with Britain’s takeover regulations, after rumors of its approach to the Anglo-Dutch company circulated among stock traders.

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The takeover would have been one of the largest deals in corporate history, but it was fiercely resisted at Unilever and had provoked political unease over British jobs. Unite, Britain’s biggest union, welcomed news of the withdraw, saying the bid illustrated a need to reform takeover rules.

One such rule, the Cadbury rule, was created after the controversial takeover of chocolate maker Cadbury by Kraft in 2010. After the deal, pledges to save factories were reneged on almost immediately, while customers believed the quality of products such as its Creme Egg were downgraded.

 

It shows the need for a ‘Cadbury rule’ which takes into account the issues like jobs and consumers in these circumstances, so it’s not just down to how deep someone’s pockets are, to throw money at shareholders.

A Unite spokesman