Kraft's Unilever Bid Faces Likely Scrutiny in Europe

Posted February 18, 2017

As The New York Times reports, the offer "came as consumer-goods companies are being squeezed by fluctuating currency rates, such as the strong United States dollar in Kraft Heinz's case, and higher prices for staples used in their products". "Kraft Heinz are attempting a massive push on the Fast Forward button...to acquire the sheer scale of brands that Unilever represents through one-off acquisitions could take decades".

Why is Kraft Heinz targeting Unilever at this juncture? It represents an 18% premium to the share price at close of business on 16 February and values Unilever's at $143bn (£115bn).

A prime example of M&A activity was a surprise $143 billion takeover bid from US food company Kraft Heinz Co for household goods firm Unilever.

In 2015, Kraft, backed by Brazil's private equity titans 3G Capital and billionaire Warren Buffett's Berkshire Hathaway investment vehicle, completed the takeover of Heinz.

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The Kraft Heinz Company (NASDAQ:KHC) performance during the last one year Improved 22.22 percent, while its year to date (YTD) performance showed a Negative trend of -0.05 percent.

On Mar 15 The Kraft Heinz Company (NASDAQ:KHC) reported its EPS in the last quarter as $0.86/Share beating the analyst estimate of $0.81/Share by the difference of $0.05. This company shares are 3.45% off its target price of $90.29 and the current market capitalization stands at $106.31B. In 2010, Kraft purchased United Kingdom chocolate company Cadbury. Unilever does not see the basis for any further discussions, ' the Anglo Dutch group said in a statement. The stock is now moving above its 20-Day Simple Moving Average of 0.06% with the 50-Day Simple Moving Average of 0.06 percent.

A combination of Kraft Heinz and Unilever would be the third-largest merger in history, with the merged entity rivaling Nestle as the world's biggest packaged food maker by sales. Kraft Heinz is now the fifth-largest food and drink conglomerate in the world after Kraft and Heinz merged in 2015. "Unilever has double the revenue of Kraft for instance", Jauke de Jong, analyst at AFS Group, said.

The US food giant, whose brands range from Heinz Tomato Ketchup and Philadelphia cheese, now has until March 17 to table an official bid.