Will Kraft Heinz's unsuccessful dealmaking with Unilever inspire future M&A?

Dive Brief:

  • Kraft Heinz Co.’s $143 billion offer to acquire Unilever was rejected last week, ending speculation over what 3G Capital’s next big attempt would be, according to Bloomberg. While the U.S. food company said Friday it would continue talks with Unilever, its takeover bid was withdrawn on Monday, The New York Times reported.
  • When word got out that 3G was looking beyond packaged food for its next major acquisition, shares of companies such as Mondelez International Inc., General Mills Inc., Kellogg Co. and Campbell Soup Co. all fell.
  • Analysts say that it’s hard to envision 3G going back to its strategy of picking up slow-growth food brands after this surprising attempt.

Dive Insight:

When Kraft Heinz released its latest earnings report last week, industry analysts were somewhat surprised that there was no news of an acquisition in the works. When details started to emerge about its attempt to purchase Unilever, not many were shocked at its effort to grow.

What was surprising, however, was that the company seemed to be moving away from its strategy of seeking consumer packaged goods companies. While Unilever has some CPG items, such as Hellmann's Mayonnaise and Lipton Tea, the European company's main business is built on home and personal care items.

This may have sent signals to the rest of the industry that Kraft Heinz is no longer looking at them. Many of the big players who thought a bid might be coming may be left with other options.

However, the abrupt end to the dealmaking between Kraft Heinz and Unilever could bring the focus back on CPG companies. Though analysts have said that the deal may have been called off because Unilever was simply not interested — regardless of price — there were many complicating factors, including the transcontinental and transnational nature of the potential merger, as well as 3G's cost-cutting and dealmaking processes. 

Some analysts say that Kraft Heinz may keep its eyes on other companies outside the food product realm — and a big merger should be in the plans for later in 2017.

Others say this attempt may inspire another brand of mergers, where food companies and personal care companies combine forces — like Unilever and Nestle.

In last week's earnings report, Kraft Heinz CEO Bernardo Hees said the company is working on sharpening its focus on profitable sales, hoping to further improve its capabilities and execution to deliver another year of strong, sustainable growth in 2017.

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Filed Under: Manufacturing Grocery Corporate