Kraft Heinz withdraws $143B takeover bid for Unilever

This comes after Unilever, makers of Dove soap and Marmite, rejected the bid on Friday afternoon as undervaluing the business.

The duo, who would have contributed significant new capital to fund the deal, were also spooked by the hostile response from United Kingdom politicians, according to one of these people.

“Kraft didn’t realise how hostile their approach would be perceived”, one source said. Both companies’ shares gained on Friday following the news of the proposal.

That case is believed to have been cited by Philip Hammond, the Chancellor and Sajid Javid, the Communities Secretary and a former Business Secretary, when they persuaded the Prime Minister not to seek quite such a strident approach in blocking foreign takeovers of British companies.

It had been forced to disclose the offer publicly at an earlier stage than planned after rumours circulated among traders.

One person who has spoken with 3G’s managing partners said recently the group has been looking at the possibility of setting up a “new platform”, which meant it could opt to acquire a company without rolling it up into Kraft Heinz.

“Kraft may have lost the first round in its attempt to set the table for the biggest food orgy in the industry’s history. Number 10 wasn’t involved in it”, the spokesman told reporters. “So the bid was withdrawn within 55 hours of it being announced”.

Unilever rejected the bid the same day. The Financial Times revealed that major shareholders in the United States food giant had decided that a public takeover battle could have done more harm than good. Speaking to FoodManufacture.co.uk before the joint statement, Shore Capital analyst Clive Black said: “I would’ve thought Unilever shareholders would be looking for a pretty knock-out deal before they decide to sell up, and I’m not sure a Kraft Heinz merger is what they were thinking of”.

However the fact that Unilever’s shares did not lose all of Friday’s gains indicates investors still think there could be some kind of a deal in the future.

At the optimistic end of its own assumptions, Unilever might be able to boost its margin by 80 basis points a year.

Had it been successful, a tie-up would have been the biggest acquisition of a British company on record based on offer value.

While it would also have combined Kraft’s strength in the United States with Unilever’s in Europe and Asia, it would also have faced a potentially huge cultural clash.

Kraft was expected to return with a higher offer but the companies announced on Sunday the proposed deal had been binned.

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