KRAFT STILL HUNGRY?
The breakdown in deal talks sparked speculation among analysts and investors about whether Kraft might attempt to purchase another large consumer goods company as a backup plan.
“We believe this announcement serves as a reminder – if needed – of (Kraft’s) interest, capacity, and commitment to pursuing large-scale M&A in a potentially near-term time horizon,” said Barclays analyst Andrew Lazar in a note.
Its bid for Unilever, where more than 60 percent of sales come from home and personal care products, signals a willingness to make big buys outside of its historic area of focus – food – said Sanford Bernstein analyst Ali Dibadj.
He cited Colgate-Palmolive Co (CL.N) as one potential target, noting that its stock popped 4 percent Friday on news that Kraft was eyeing Unilever.
However, the breakdown of the Unilever talks means that some food companies that have long been speculated as potential targets for Kraft, such as Mondelez (MDLZ.O), are still very much on the table, said an industry banker, who declined to be named because he was not authorized to speak to the press.
Low interest rates and cheap debt have fueled big cross-border deals, marking the busiest start to the year for M&A activity on record. The bid also reflected a broader interest in UK companies as acquisition targets, in part due to the British pound, which has been under pressure since Britain announced plans to withdraw from the European Union.
Labor union representatives expressed relief that the deal talks broke down, citing concern about its potential effect on jobs and consumers.
“How many scares must the government put UK workers through before they actually do as they have promised, which is to make the takeover process socially responsible?” said Len McCluskey, general secretary at Unite, Britain’s largest union.
(Editing by Nick Zieminski and Phil Berlowitz)
Article Appeared @http://www.reuters.com/article/us-unilever-nv-m-a-kraft-heinz-idUSKBN15Y0RR