Companies and Brands

Can Kraft Heinz Come to Terms With Unilever?

Chris Lange

Published: February 17, 2017 10:05 am

Last Updated: January 12, 2020 2:44 pm

Shares of Kraft Heinz Co. (NASDAQ: KHC) saw a handy gain early on Friday, following a long saga of looking for an acquisition target. However, the search does not appear to be over. Kraft Heinz recently made an offer to acquire Unilever PLC (NYSE: UL) in perhaps one of the largest cross-border deals ever.

This deal was ultimately rejected, but Kraft Heinz plans to continue negations with Unilever over the terms of the transaction. Unilever management reportedly said that this offer fundamentally undervalued company:

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.

The transaction originally was valued up to $143 billion, or about $50 per share, which was a premium of 18% from Thursday’s close at $42.57. Although this seems to just be a head fake, it is entirely possible that these two could come to terms.

Unfortunately one of the losers from this deal was Mondelez International Inc. (NASDAQ: MDLZ). There was much speculation that this snack maker would be the main target for Kraft Heinz. Back in 2012, Mondelez was spun off from Kraft Heinz.

It remains to be seen what will happen, but what is for sure is that Kraft Heinz is not done hunting.

Shares of Kraft Heinz closed Thursday down 4.2% at $87.28, with a consensus analyst price target of $90.29 and a 52-week trading range of $71.82 to $91.30. In early trading on Friday, the stock was up 7.5% at $93.88.

Unilever traded Friday morning at $46.74, up 9.8%, in a 52-week range of $38.58 to $48.97 and with a consensus price target of $38.85.

Mondelez shares were down 3.8% at $41.55 just after the opening bell. The consensus price target is $49.38, and the 52-week range is $39.21 to $46.40.