Kraft Heinz Co Makes Formal Merger Proposal To Unilever

Kraft Heinz Co (NASDAQ:KHC) this morning [Feb 17, 2017 | 7:16am] confirmed it has made a formal merger proposal to London-based consumer products giant Unilever plc (NYSE:UL). Unilever has rejected the offer, but KHC isn’t giving up that easily saying... it would continue to work to get a deal done, and is confident the two entities can come to an agreement eventually.

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Zerohedge has some details on the massive size of the proposed deal:

With Unilever’s market capitalization of £112bn, a potential takeover would be one of the largest in history. The company is the world’s fourth-largest consumer goods company by sales, with revenues last year of €52.7 billion. As the FT adds, “a deal would unite some of the biggest brands in the global consumer good industry, adding the likes of Dove and Knorr to the Kraft Heinz roster, which spans Philadelphia cream cheese, ketchup and Weight Watchers.”

Meanwhile, Bloomberg points out that M&A in the space is really heating up:

A deal would mark a major step-up in industry consolidation following this week’s $16.6 billion agreed offer for baby-formula maker Mead Johnson Nutrition Co. by Reckitt Benckiser Group Plc. Consumer-goods makers need to find new avenues for growth as conditions become tougher across the globe. 3G Capital, the private-equity firm that runs Kraft Heinz, is under pressure to either do another major deal or show the company can boost sales.

Kraft Heinz noted in a statement that it offered $50 per share for Unilever, which is about a 17.5% premium over its Thursday closing price of $42.57.

Unilever shares surged 11% on the news this morning, while Kraft Heinz Co shares rose $3.78 (+4.33%) in premarket trading Friday. Year-to-date, KHC has declined -0.05%, versus a 5.01% rise in the benchmark S&P 500 index during the same period.

KHC currently has a POWR Rating of A (Strong Buy), and is ranked #1 of 62 stocks in the Food Makers category.

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Lorimer Wilson 5 years ago Author's comment

I had a career in packaged goods marketing (sales & marketing & senior management)and underwent a number of mergers. In every case synergies and economies of scale were realized. I think a Kraft Heinz merger would prove beneficial to all.

Susan Alter 5 years ago Member's comment

Makes sense, thanks Lorimer.

IB Trading 5 years ago Member's comment

Big news! What's your personal take on this potential merger @[Lorimer Wilson](user:22485)? $KHC $UL