Kraft calls off £115bn pursuit of Unilever after 55 hours

Kraft Heinz has abandoned its bid to buy global consumer goods rival Unilever, just 55 hours after its $143bn (£115bn) opening offer was announced.

In what would have been the biggest buyout of a UK company ever – and one of the biggest mergers in corporate history – Kraft, which is majority owned by Warren Buffet and the private equity firm 3G, made its approach on Friday.

The deal "would have brought together some of the world's best known brands, from toothpaste to ice creams," says Reuters.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Unilever owns hundreds of consumer brands across a range of product sectors. These include Marmite, Dove soap, Hellman's mayonnaise and Ben and Jerry's ice cream.

Kraft is best known for its Heinz brand, famously found in baked beans and tomato ketchup. It also owns other well-known names such as HP Sauce and Philadelphia soft cheese.

The offer was flatly rejected, however, with Unilever saying it saw in it "no merit, either financial or strategic".

Kraft said today it was no longer pursuing the acquisition. A joint statement from both companies added "Unilever and Kraft Heinz hold each other in high regard".

Analysts suggest that Unilever's strong rebuttal of the original deal was the main reason for Kraft pulling out so early, not least because it feared having to pay an excessive premium in a "hostile takeover".

"Kraft Heinz was shocked by the vehemence with which its 'friendly' merger offer was rebuffed," says the BBC's Joe Lynam.

"The bosses of both consumer giants spoke over the weekend and it was clear that if Kraft really wanted Unilever it would have to launch a hostile takeover bid that could have ended up being very expensive.

"The higher the price, the less worthwhile the deal. So the bid was withdrawn within 55 hours of it being announced."

There was also a potential political backlash to deal with, suggests Reuters.

"[UK Prime Minister Theresa] May… had indicated her government would want to examine the deal if it went ahead, according to a person familiar with the situation."

May had "previously singled out Kraft's 2010 acquisition of another British household name, Cadbury Plc, as an example of a deal that should have been blocked".

Unilever's shares soared 15 per cent in London on Friday, but by mid-afternoon today had fallen back 7.5 per cent, to £35.09.