LONDON — Take no action.
That was the Unilever board’s advice to shareholders late Friday as it rejected a takeover proposal from The Kraft Heinz Co. As reported, Kraft Heinz is looking to buy the entirety of the food-to-skin-care giant, which trades publicly as Unilever plc and Unilever N.V.
As reported earlier on Friday, Kraft spokesman Michael Mullen confirmed that Kraft had made a “comprehensive proposal to Unilever” about combining the two groups, and left the door open for a further bid. The aim, he said is to create “a leading consumer goods company with a mission of long-term growth and sustainable living.”
He added that while Unilever declined the proposal, “we look forward to working to reach agreement on the terms of a transaction. There can be no certainty that any further formal proposal will be made to the Board of Unilever or that an offer will be made at all or as to the terms of any transaction.”
Unilever has issued a warning and advice to shareholders on its web site in case they receive unsolicited phone calls in relation to the bid. Late Friday, the board told shareholders that the proposal represents a premium of 18 percent to Unilever’s share price as of the close of business on Feb. 16.
“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. Unilever plc and Unilever N.V. recommend that shareholders take no action.”
Unilever said the proposal it received was that Unilever common shareholders would receive $50 per share in a mix of $30.23 per share in cash payable in U.S. dollars and 0.222 new, enlarged entity shares per existing Unilever share, which valued Unilever at a total equity value of approximately $143 billion.
The deal would have added a portfolio of beauty and personal-care brands to Kraft, which owns food brands like Oscar Meyer, Kool-Aid and Jello-O. Unilever’s portfolio includes food, home and personal-care brands, such as Hellman’s, Windex and Dove.
Unilever has been working to build up its higher-end beauty portfolio in recent years with acquisitions like hair-care brand Living Proof, which closed in January, and skin-care brands Murad, Kate Somerville and Ren.
Unilever’s shares traded up Thursday on rumors of the news, closing at $42.32, and were up about 10 percent, to $46.97 in premarket trading. On Friday, they closed up 12.3 percent to 44.41 euros, or $47.30.