Unilever rejects Kraft Heinz’s initial bid

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http://seekingalpha.com/article/4047349-unilever-rejects-kraft-heinzs-initial-bid

Kraft Heinz has made an initial offer of $143 billion to acquire Unilever; its bid is likely to be raised.

Regulatory risk to the deal is significant, but both companies own so many brands that are, in effect, discrete businesses, that meeting regulatory demands should pose few problems.

The strategic rationale appears to favor Kraft Heinz shareholders, but full details of its intentions are not yet available.

On February 17, Kraft Heinz (Nasdaq:KHC) approached Unilever (NYSE:UL, NYSE:UN) with an offer to buy it out for $30.23 in cash plus 0.222 Kraft Heinz shares, a total consideration of some $143 billion and an 18% premium over Unilever’s closing share price the previous day. Unilever promptly rejected the offer in no uncertain terms, but Kraft Heinz indicated to the press that it intends to pursue the idea.

The offer certainly has an element of opportunism to it, which doubtless has not impressed the target. Unilever’s share price has suffered since October as a result of a weaker-than-expected Q3 report and an uninspiring revenue growth outlook. Prior to that, Kraft Heinz’s proposed deal structure did not look anywhere near so generous, although it still offered a premium.

Markets’ reaction to the bid suggests that arbitrageurs are not expecting the matter to end with Unilever’s initial rejection of the idea. Unilever ended the day up 13.4%, yet the price premium of Kraft Heinz’s offer remained 9.4%. This is because Kraft Heinz’s share price also rose on the announcement, by 10.7% ─ a fairly remarkable development for a company making so large an offer.

Unilever is probably right to hang tough on valuation grounds: while it certainly faces some challenges in recapturing the unit growth it has enjoyed in recent years, the prospect of doing so is not so daunting as they might seem, given some stabilization among emerging market economies. Further, the strategic logic of the combination is not entirely clear, and probably more to the benefit of Kraft Heinz shareholders than Unilever’s. And the financial condition of Kraft Heinz means that purchasing Unilever, even at such a price, would be something of a stretch, leaving the resulting company rather highly leveraged by the standards of consumer staples businesses.

Any deal so large would inevitably face regulatory scrutiny. This is a wild card, particularly in the European Union, because the E.U. is so arbitrary in its definition of what constitutes a market, and therefore the extent of market dominance. As a trivial example that may nevertheless be significant for the proposed combination, do ketchup and mustard constitute separate categories (in which case the group might face no problems retaining these products) or are they both components of the condiment market (in which case the combination might be forced to make disposals)? The proposed deal will probably face fewer challenges in other jurisdictions.

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a big one here..unilever are massive..and one of the major players in global business..kraft heinz is in the same boat..so you have two absolute behemoths coming together..consolidation..

“Any deal so large would inevitably face regulatory scrutiny. This is a wild card, particularly in the European Union, because the E.U. is so arbitrary in its definition of what constitutes a market, and therefore the extent of market dominance.”

no wild card..it will be passed when required..

https://en.wikipedia.org/wiki/Kraft_Heinz

401

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~ by seeker401 on February 22, 2017.

11 Responses to “Unilever rejects Kraft Heinz’s initial bid”

  1. You gotta see this!! Senator Curt Weldon, is coming out about everything. From Clinton and podesta stuff to 911!

  2. Trace ownership and Unilever is Kraft.
    Banksters retail monopolies getting bigger.
    All the bullshit in this article about ” the market” . to push up shares in the banksters market monopoly .And those doing this already have made a fortune on it ( insider trading)and don’t give a crap about unilevers self given inflated “valuation’.
    The banksters don’t get regulated. Thats what your govt is for to make sure their commerce is not interfered with or silly things like legislation is not applied in their courts to their corporations.

  3. Reblogged this on World Peace Forum.

  4. Mary M.

    Only people who have never listened to his radio show would say that. The info on his show is unbelievable. Im no dunce. I can see through bullshit pretty quick. Jones is real. But you will never realise that till you stop and listen to his show.

    And seek. Your site will be shut down in the near future if you dont stop posting links to mainstream media stories, as they are soon to change laws to make it copyrighted. They will ‘own’ their words and stories. Yes, your freedom of speach etc is about to dissapear.

    The breadth of the topics Jones covers is amazing!

    I told you trump is a bigger story than JFK. I am right. Jones is a big part of the story. There is a lot of stuff happening. You wont find it anywhere else but on Drudge and Jones. To not listen whet they say is to be ignorant.

    I suspect, from what Jones has said, Drudge and Jones are going to amalgamate, and become a legit news source, together with white house press passes.

    • Your site will be shut down in the near future if you dont stop posting links to mainstream media stories, as they are soon to change laws to make it copyrighted. They will ‘own’ their words and stories.

      i link the original url and take no credit for the copy and pasting..i receive no money for my site..i will be fine.. 😉

    • Only people who do not understand that for the totalitarian oligarchy to maintain full control the opposition must be controlled.
      This is called “controlled opposition”.
      Don’t be ignorant and naive.

  5. you miss my point. Its been announced all alternate news websites will be bannned from using establishment media stories. you wont be able to repost them at all. You cant even post a quote!!

    Dont believe me? Either listen to Jones, read Drudge, or just wait. They will own their words, and you will have no right to use it.

    Sit back, do nothing, and dont even listen to the fight going on…

    • link me to this: Its been announced all alternate news websites will be bannned from using establishment media stories. you wont be able to repost them at all.

      then i can make a better informed comment..

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