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Unilever shares knocked as Kraft retreats

Monday, February 20, 2017 - 01:50

Shares in Anglo-Dutch consumer goods group Unilever drop 8 percent after U.S. rival Kraft Heinz Co abruptly ditches its surprise $143 billion merger proposal. Ciara Lee looks at the reasons for the sudden chage of heart.

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From toothpaste to ice creams - it would have brought together some of the world's biggest brands. But Kraft Heinz abruptly ditched its surprise $143 billion merger proposal. Unilever's CEO dismissed the offer as having no financial or strategic merit. But there may have been other issues at play. (SOUNDBITE) (English) JASPER LAWLER, SENIOR MARKET ANALYST, LONDON CAPITAL GROUP, SAYING: "There's a history with Kraft in the UK. They took over Cadbury a few years ago. There were promises there to maintain jobs in the UK which were abruptly broken not long after the deal. And so obviously in this environment which is very jobs focussed in the UK, concerns around the economy and Brexit." Backed by Warren Buffett and private equity firm 3G, the merger would have combined Kraft's strength in the U.S with Unilever's in Europe and Asia. (SOUNDBITE) (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING (on UNILEVER): "The issue of take-overs in the consumer business remains a very relevant topic. If company X takes over company Y and buys the brand products, that company and the brand products are gone. In a world where it's more and more about brand products it is clear that take-over fantasies, merger fantasies in the consumer business are only just beginning." Shares in Unilever, dropped 8 percent on Monday. That's after jumping 13 percent when the approach was made public. (SOUNDBITE) (English) JASPER LAWLER, SENIOR MARKET ANALYST, LONDON CAPITAL GROUP, SAYING: "I think the possibility that Kraft could buy part of Unilever, maybe including the food division, goes some way to explain why we've not seen all of the gains from Friday when the deal was first announced erased. Unilever shares are still up on the bid announcement. I think that probably reflects the that maybe they'll come back to the table at a later point." But they may face resistance. There were regrets after Kraft bought Cadbury's in 2010. British Prime Minister Theresa May has suggested she'll be looking more closely at foreign takeover bids as Britain goes it alone after Brexit.

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Unilever shares knocked as Kraft retreats

Monday, February 20, 2017 - 01:50