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Kraft Heinz Offers $143 Billion for Unilever

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Friday, February 17, 2017

Big news ahead of the opening bell today: Pittsburgh-based Kraft Heinz Co. (KHC - Free Report) has approached European multinational consumer staples giant Unilever (UL - Free Report) for a whopping $143 billion. This is an 18% premium to yesterday’s Unilever closing price, and the largest-ever cross-border deal offer in corporate history.

Yet apparently it’s not enough, according the the London and Rotterdam, Netherlands-based company, which carries brands from Lipton tea to Axe body spray. At $50 per share, Unilever says the American company’s offer has “no merit,” and there is ”no basis for further talks.” Regardless, shares of KHC are up 5% in the pre-market, while UL is trading up 11%.

From Kraft Heinz’s perspective, the condiments giant says it is “looking forward to coming to terms on the deal.” But even though this deal would stand as the largest-ever acquisition in the Consumer Staples space, as well as the third-largest deal ever, the company may need to further sweeten the pot.

According to UK by-laws, Kraft Heinz has one month — til St. Patrick’s Day — to decide whether it will further pursue a deal or walk away. It will then be up to shareholders whether or not they wish to go ahead, today’s rhetoric from the top brass notwithstanding. This leaves weeks of discussion ahead, and considering the current terrain of a stronger U.S. dollar and weaker British pounds sterling, should allow for a good measure of intrigue going forward.

In other consumer products news, Campbell Soup Co. (CPB - Free Report) beat earnings estimates for its fiscal Q2 2017 by three cents on slightly lower-than-expected quarterly revenues. This amounts to a 5% year-over-year gain in earnings. The company retained its full-year 2017 guidance.

Market bulls are taking a breather before the bell today, after a gangbuster week on all major indexes. The S&P 500 is down 6 points but is still at 2347, the Dow -60 but buoyant at 20,620 and the Nasdaq -5 but still riding high at 5814.

Mark Vickery
Senior Editor

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