What happened
Shares of Unilever (UL +1.06%) were up 12.1% as of 11:45 a.m. EST Friday after Kraft Heinz (KHC 0.14%) offered to acquire the multinational consumer goods company.
So what
Kraft offered to buy Unilever in a cash and stock deal worth roughly $50.00 per share -- or more specifically, $30.23 per share in cash, and 0.222 Kraft Heinz shares for each existing Unilever share. That offer valued Unilever at a total equity value of roughly $143 billion, and represented an 18% premium to Unilever's closing price on Thursday.
This morning, however, Unilever issued a statement (opens PDF) insisting Kraft's initial offer "fundamentally undervalues Unilever." As such, the company rejected Kraft's proposal "as it sees no merit, either financial or strategic, for Unilever's shareholders, [and] does not see the basis for any further discussions."
Image source: Unilever.
Now what
Nonetheless, Kraft Heinz has already acknowledged its offer has been declined, but hinted that it looks forward to "working to reach agreement on the terms of a transaction."
From an investor's perspective, such a deal would provide obvious synergies of scale, combining Unilever's enviable stable of brands from Dove to Lipton, Hellmann's, Korr, Vaseline, and Axe (to name only a few) with Kraft Heinz's equally monstrous product portfolio including not only its namesake products, but also Oscar Meyer, Classico, Velveeta, Kool-Aid, Jell-O, Planters, and Grey Poupon, and dozens of others.
But while it seems clear Kraft Heinz is ready to negotiate, it remains to be seen whether Unilever will be receptive to a sweetened offer. For now, investors in both companies will need to hurry up and wait for more details on this potential megamerger.
