Unilever share price rises as it reveals plans for business review in wake of collapsed Kraft Heinz deal

BRITAIN-EU-ECONOMY-RETAIL-BREXIT
Marmite owner Unilever was approached by Kraft Heinz but deal talks fell apart (Source: Getty)

Consumer goods giant Unilever has pledged to shake-up its business on the back of a £113bn botched takeover attempt by rival Kraft Heinz.

The FTSE 100-listed consumer products group issued a statement to the Stock Exchange in the wake of a collapsed potential deal with US rival Kraft Heinz, which is part-owned by Warren Buffett and 3G Capital.

"Unilever is conducting a comprehensive review of options available to accelerate delivery of value for the benefit of our shareholders. The events of the last week have highlighted the need to capture more quickly the value we see in Unilever," the Anglo-Dutch company admitted.

The review is expected to be completed by early April. The rapid response to Kraft’s failed takeover, which would have been the second largest of all time, boosted Unilver’s share price by 5.7 per cent.

Its shares closed at 3,791p, up from a closing price of 3,348p at the end of play last Thursday, the night before news of Kraft’s approach emerged.

The company’s market capitalisation has risen more than £13bn over the past week.

Read more: These are the brands that a combined Unilever and Kraft Heinz would have owned

London-based stakeholders to have benefited include BlackRock, Legal & General and Morgan Stanley. And while some investors dumped their shares after Kraft pulled out, BlackRock and UBS upped their stakes.

Shares in Unilever, which owns household names like Marmite, Mr Kipling and Hellman's, shot up 15 per cent last Friday when Kraft announced it had approached the British firm.

However, over the weekend Kraft said it had "amicably agreed" to abandon the proposed merger, which would have been the second largest in corporate history, and the largest ever acquisition of a UK-based company.

"When somebody lights a fire under your feet, you jump higher," said Berstein analyst Andrew Wood, commenting on Unilever’s review.

"It has also become apparent in conversations with investors over the subsequent days, that [Unilever chief executive Paul] Polman and his team were going to come under significant pressure from some shareholders who fundamentally disagreed with the aggressive rebuff of Kraft."

The announcement comes as ratings agency Moody's said the Kraft Heinz offer led it to believe "Unilever might now consider increasing shareholder remuneration and/or its M&A activity".

Moody's suggested that Unilever could run a €10bn (£844m) share buyback over 2017-2019, with little impact on debt and earnings.

Related articles