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Unilever shares slide after Kraft Heinz withdraws bid

Published:Tuesday | February 21, 2017 | 12:00 AM
In this March 2, 2011 file photo, Heinz ketchup bottles are displayed on the shelf of a market on in Barre, Vermont. (AP Photo/Toby Talbot, File)

Shares in Unilever, the owner of brands like Hellman's, Lipton, and Knorr, were down sharply Monday, a day after rival Kraft Heinz withdrew a US$143-billion takeover offer.

The companies said Sunday in a joint press release that Kraft Heinz has "amicably" abandoned the offer.

Shares in Unilever slumped 6.5 per cent on Monday to €41.91 in Amsterdam, one of the places they're listed. They had jumped 14 per cent on Friday.

The deal would have combined Kraft Heinz products such as Oscar Mayer, Jell-O and Velveeta with Unilever's stable of brands, which include food as well as other consumer goods like Dove soap and Vaseline. The merged company would have rivalled NestlÈ as the world's biggest packaged food maker by sales.

Still in the market

Analysts say Kraft Heinz, co-headquartered in Chicago and Pittsburgh, is still in the market for acquisitions. The fact that it bid for all of Unilever and not just its food business indicates that Kraft Heinz is potentially open to acquiring other packaged consumer goods, one analyst said.

Unilever, which has a head office in London and multiple stock listings, rejected the offer on Friday, but despite that, Kraft Heinz said at the time that it was still interested in the deal.

Such acquisitions might not lead to big changes that customers would notice on supermarket shelves, but shifting tastes are partly driving deal-making in the food industry.

Part of the challenge is the proliferation of smaller food makers marketing products that seem more wholesome, which makes it harder for the established companies to drive up sales simply by selling more of their well-known products or by raising prices, as they have in the past.

"That obviously has its limits," David Garfield, head of the consumer products unit at consulting firm AlixPartners, said last week.

Instead, major packaged food companies are being forced to dig deeper to find cost efficiencies or tap into new markets, Garfield said. That can include mergers that result in consolidated manufacturing systems, or that give companies access to distribution networks in regions of the world where they don't have a big presence.

- AP