(MENAFN- The Peninsula)
London: Kraft Heinz Co. made a $143bn offer for Unileverin what would be the largest-ever takeover in the food or beverage industry, opening a campaign to create a consumer-goods giant with household names from Dove soap to Heinz ketchup.
Unileversaid yesterday it rejected the $50 a share proposal, comprising about two-thirds in cash and a third in new stock. The approach 'fundamentally undervalues the company, Unilever said, adding that it doesn't see a basis for further discussions. Kraft Heinz said earlier it would seek to gain an agreement on the terms of a transaction.
Unilever shares surged as much as 15 percent to a record in London, valuing the maker ofHellmann's mayonnaise at more than £113bn ($140bn). TheAnglo-Dutch company's stock gained as much as 12 percent in Amsterdam, while KraftHeinz rallied more than 7 percent in New York.
The bid underscores consolidation among consumer-goods companies searching for profit-growth strategies as conditions become tougher across the globe. Kraft Heinz itself was forged in a $55bn combination orchestrated by Warren Buffett's Berkshire Hathaway Inc. and Brazilian investment firm 3G Capital, which had teamed up two years earlier on a buyout of H.J. Heinz.
There had been speculation that 3G would look to buy another food company and resume a cost-cutting cycle spearheaded by Chief Executive Officer Bernardo Hees. Mondelez International Inc., General Mills Inc. and Kellogg Co. had been mentioned as potential targets.
Unilever said the proposal was at an 18 percent premium to Thursday's closing share price. Berenberg analysts said such a valuation would imply multiples of 3 times sales and 21 times earnings, 'which strikes us as very low.
Putting together Kraft Heinz and Unilever would create a company with combined sales of $84.8bn last year. That would have ranked second among food and beverage companies. Among food and beverage transactions, a deal for Unilever would surpass Anheuser-Busch InBev SA's purchase last year of SABMiller Plc for about $123bn including debt.
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