Kraft Heinz Co (NASDAQ:KHC) has withdrawn its bid to merge with Unilever Plc, in a deal that would have been valued at $143 billion. The announcement came just two days after the deal was announced and has created rumors that Kraft may seek out a new target. As such, the company’s stock has quickly become one of the top Nasdaq stocks, with trade volume that is 10 times higher than average. Had the deal gone through, it would have been one of the largest corporate mergers, in history.
The two companies released a joint statement, which claimed that Kraft had agreed to withdraw its offer, after Unilever rejected the bid on Friday. A separate statement from KHC revealed that the decision was taken, because the management thought it would be difficult to negotiate, with the details of the merger having gone public. It should be pointed out here that takeover rules in the UK forbid Kraft to revive takeover talks, for a period of 6-months.
Soon after the Nasdaq Stocks news got out, KHC was forced to publicly disclose its offer on Friday, as per UK regulations. Michael Mullen, a spokesman for Kraft, stated that this early disclosure was the main reason for the withdrawal. He claimed that the initial motive was to proceed with the deal in a friendly manner, but Unilever was uninterested in the offer. The disclosed terms of the deal pointed out that Kraft planned to pay $50 per share for the merger, with $30.23 in cash and 0.222 shares in the new entity, for every share of Unilever.
The two companies are said to have different operating cultures as well, with Kraft being known as a ruthless cost cutter on WallStreet, while Unilever is viewed as a pioneer in its long-term initiates. However, given the financial health and profit ratios of KHC, it is expected that the company would most likely go for another large target, in a similar friendly deal.
Kraft Heinz Co (NASDAQ:KHC) gained 10.74% in terms of its share value, during the February 17 trading session, to reach a close at $96.65 per share.