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Kraft Heinz Withdraws $143 Billion Unilever Acquisition Bid

U.S. company Kraft Heinz's rapid retreat from its surprise bid for Unilever sent the Anglo-Dutch group's shares down over seven percent on Monday in London and Amsterdam.

However, Unilever slumped after Kraft Heinz withdrew a $US143 billion takeover bid.

On Monday opening, Anglo-Dutch consumer goods company Unilever experienced a sharp plunge in the European markets after the announcement that Kraft Heinz withdrew their initial takeover bid just two days after the £115.05 billion merger proposal was made public.

"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".

A Kraft Heinz-Unilever merger would have made for the second-largest food-and-drink company in the world, according to Bloomberg data, bringing together brands such as Oscar Mayer and Planters and Lipton and Hellmann's.

In a joint statement, Kraft Heinz said that it held Unilever "in high regard" and that it had "the utmost respect for its culture, strategy and leadership". This meant Kraft did not have the time to woo key investors before going public with its interest.

Mondelez (himself a spin-off from Kraft Foods in 2012) was also turned away previous year by Hershey, also known for his chocolates, and one of his shareholders, the investor Activist Bill Ackman, pleads for a rapprochement with Kraft Heinz. The combination of Kraft and Heinz two years ago created the fifth largest. Thus, it is better to call it off and let both the companies focus on their own business goals.

The value of failed deals is likely to continue, bankers say, with companies still likely to seek ambitious acquisitions.

Unilever has a track record of investing in sustainable and ethical business, while Kraft Foods - one of the two constituent parts of Kraft Heinz - was criticised in the United Kingdom following its successful takeover bid for Cadbury in 2009.

The quick withdrawal of Kraft's offer is surprising as Unilever's defences were not very formidable, such as its low stock ownership by the management, said Bloomberg Intelligence senior analyst Ken Shea. In addition the aborted bid offer will increase the pressure on Unilever to improve its profit margins.

Its management fretted about the cost-cutting model at Kraft, which sells products like Velveeta and Jell-O, and its lack of vision for cultivating brands, said people familiar with the situation.



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