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Unilever Rejects Kraft Heinz' Merger Offer

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Kraft Heinz Co. said it made an approach to Unilever about combining the consumer-goods companies, a deal that would bring together brands including Dove soap and Heinz ketchup.

Unilever rejected the approach, Kraft Heinz said Friday in a statement issued in response to speculation that it had made a bid. The Pittsburgh-based company made a “comprehensive proposal” and will seek to gain an agreement on the terms of a transaction, it said.

Unilever shares surged as much as 14% in London and 11% in Amsterdam, valuing the maker of Dove soap at about £111 billion pounds. Kraft Heinz gained about 3.7% in premarket trading in New York.

“There can be no certainty that any further formal proposal will be made to the board of Unilever or that an offer will be made at all or as to the terms of any transaction,” the US company said.

Kraft Heinz is itself the product of a merger. The company was forged by a $55 billion combination orchestrated by Warren Buffett’s Berkshire Hathaway Inc. and 3G, 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. have been mentioned as potential targets.

The deal would be the largest takeover ever in the food or beverage industries, surpassing Anheuser-Busch InBev SA’s purchase last year of SABMiller Plc for about $123 billion including debt, InBev NV’s purchase of Anheuser-Busch Cos. in 2008 and the 2015 transaction that created Kraft Heinz, according to data compiled by Bloomberg.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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