New York – Anglo-Dutch Unilever company’s shares dropped on Monday after Kraft Heinz Co’s rapidly retreated from its surprise $143 billion bid for the company.
Kraft, backed by prominent businessman Warren Buffett and the private equity firm 3G, wanted to buy Unilever as part of its strategy to become a global consumer goods giant by buying competitors and cutting costs and jobs to make profits.
Yet, Kraft had not factored in Unilever Chief Executive Paul Polman dismissing its offer as having no financial or strategic merit and refusing to come to the table.
U.S. media sources pointed out that Buffett and Kraft’s board decided to withdraw from the bid and they alerted Britain’s Business Secretary Greg Clark in a brief call on Friday soon after it made its approach public.
Kraft laid out its plan to create a consumer goods entity with headquarters in the United States, Britain and the Netherlands and promised to keep Downing Street informed on any developments.
“Kraft didn’t realize how hostile their approach would be perceived,” one source said.
For Kraft, Britain’s response was a major concern after Prime Minister Theresa May signaled she would take a more proactive approach to foreign takeovers, sources told Reuters.
May, previously singled out Kraft’s 2010 acquisition of another British household name, Cadbury, as an example of a deal that should have been blocked, had indicated her government would want to examine the deal if it went ahead, according to an informed source.
However, a spokesman for May said on Monday the government had not been involved in Kraft’s decision to pull its proposal. “The issue of the withdrawal from the Unilever deal by Kraft is an issue you should put to Kraft. Number 10 wasn’t involved in it,” the spokesman told reporters.
Dutch Prime Minister Mark Rutte, who used to work at Unilever, also said he would examine what it would mean for the Netherlands in the “positive and the negative” sense.
Unilever’s London-listed shares fell 8% after it jumped to a record high of 13% when the bid was made public on Friday.
The shares dropped after Kraft Heinz said in a joint statement with Unilever that it had “amicably agreed to withdraw its proposal for a combination of the two companies”.
The companies said: “Unilever and Kraft Heinz hold each other in high regard. Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever.”
Kraft Heinz said in a separate statement that its “interest was made public at an extremely early stage. Our intention was to proceed on a friendly basis, but it was made clear Unilever did not wish to pursue a transaction.”
It added: “It is best to step away early so both companies can focus on their own independent plans to generate value. We remain focused on driving long-term value while always putting our consumers first.”