Kraft Heinz withdraws proposal for $143bn merger with Unilever

Food company Kraft Heinz has agreed to withdraw its proposal for a $143bn merger with consumer products maker Unilever.

Kraft dropped the offer as it felt it was difficult to negotiate a deal after the public disclosure of its bid so soon after its approach to Unilever, reported Reuters.

It is reported that the deal was rejected by Unilever due to potential scrutiny from the UK Government, as well as differences between cultures and business models of the firms.

Kraft Heinz spokesman Michael Mullen was quoted by the website as saying: “Kraft Heinz’s 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 is best to step away early so both companies can focus on their own independent plans to generate value.”

According to Business Insider, Kraft Heinz offered $50 a share, which was claimed to be an 18% premium on the company's value by Unilever.

Unilever was quoted by the website as saying: "Their proposal represents a premium of 18% to Unilever's share price as at the close of business on 16 February. This fundamentally undervalues Unilever.

"Unilever rejected the proposal as it sees no merit, either financial or strategic, for Unilever's shareholders. Unilever does not see the basis for any further discussions."

The food company had to publicly disclose its proposal to comply with the UK's takeover regulations, which also prevent the firm from pursuing such offers with Unilever for six months.

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Image: Unilever headquarters in Rotterdam, Netherlands. Photo: courtesy of Henk Bezemer via Wikipedia.