Kraft Heinz Makes $143 Billion Bid for Unilever

Feb. 17, 2017
Despite selling off many food brands, Unilever rejects the offer; speculation is Kraft Heinz would have to sell off personal products.

U.S. food giant Kraft Heinz Co. has made a $143 billion offer to take over Europe’s Unilever. Although Unilever rejected the offer, Kraft Heinz officials said talks are ongoing, although no deal can be assured.

If it were to proceed at $143 billion, this deal would be the second-largest acquisition to cross country lines on record, behind Vodafone’s $172 billion acquisition of Mannesmann in 1999, according to Dealogic and quoted in the Wall Street Journal.

Although it's publicly held, Kraft Heinz is primarily owned by Warren Buffett’s Berkshire Hathaway investment firm and Brazilian equity firm 3G Capital, both of whom have deep pockets.

Also public, Unilever has been shedding its food assets in recent years, selling its Ragu and Bertolli brands to Mizkan, Wish-Bone dressings to Pinnacle Foods and Skippy peanut butter to Hormel. While it appears to be growing its personal care products lines (Dove, Axe, Vaseline, Suave), it still owns such leading food brands as Hellmann’s mayonnaise, Knorr sauces, Country Crock spreads, Lipton teas and Breyers and Ben & Jerry’s ice cream.

One analyst quoted by CNBC said the only way Kraft Heinz could afford such a deal is to quickly sell off the personal products and keep the food brands. There appears to be little overlap in the food products, but the deal would give Kraft Heinz a greatly expanded presence outside of North America.

In a statement carried by other media on Feb. 17, Unilever said the proposal was for $50 a share, including $30.23 in cash and 0.222 share of the combined new company. Totaling $143 billion, it represents an 18 percent premium to Unilever's Feb. 16 closing stock price, but Unilever said undervalues the firm.

Both companies maintain dual headquarters, the result of past mergers. Unilever is headquartered in London and Rotterdam, Netherlands; Kraft Heinz maintains offices in Pittsburgh and Chicago.

Those past mergers: Two years after Berkshire Hathaway and 3G Capital bought H.J. Heinz Co. in 2013, the firm paid $45 billion to merge with Kraft Foods. Unilever goes way back to the 1930s merger of UK's Lever Brothers with Netherlands' Margarine Unie.

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