Kraft Heinz Withdraws $143 Bln Takeover Offer For Unilever

20-Feb-2017 - USA

U.S. food maker Kraft Heinz Co. (KHC), which had offered $143 billion in cash and stock to buy Anglo-Dutch consumer goods company Unilever, Sunday said it has amicably agreed to withdraw its proposal for a combination of the two companies.

In a statement, the companies stated that Unilever and Kraft Heinz hold each other in high regard, and that Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever.

It was on Friday that Kraft Heinz said it has made its comprehensive takeover proposal. As per the proposal, Unilever common shareholders were to receive $50 per share in a mix of $30.23 per share in cash payable in U.S. dollars and 0.222 new enlarged entity shares per existing Unilever share. The offer valued Unilever at around $143 billion.

The potential offer for all of the shares of Unilever represented a premium of 18 percent as at the close of business on February 16. Both companies' shares gained on Friday following the news of the proposal.

However, Unilever rejected the offer, noting that it fundamentally undervalues the firm. According to Unilever, the proposal had no merit, either financial or strategic to its shareholders and hence rejected it. Unilever also said it did not see the basis for any further discussions and asked its shareholders to take no action.

Following the rejection, Kraft Heinz reportedly had said that it would go ahead with the terms of its proposal. Kraft Heinz was expecting the combination to create long term growth.

As per reports, the withdrawal of the offer was because the company felt it was too difficult to negotiate a deal as the approach was made public so soon.

Bloomberg reported, citing people with knowledge of the situation, that 3G Capital and billionaire Warren Buffett's Berkshire Hathaway Inc., which together own about half of Kraft Heinz, decided to walk away from the offer after Unilever's negative response made a friendly transaction impossible.

Kraft Heinz spokesman Michael Mullen reported said in a statement, "Kraft Heinz's 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."

On Friday, Kraft Heinz shares closed trading at $96.65, up 10.74 percent. Unilever shares closed at $48.53, up 14 percent. (dpa)

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