London market rises amid Kraft's $143bn bid for Unilever — FTSE Moves

Kraft Heinz Co caught Unilever plc (ADR) off guard on Friday with a surprise takeover bid of $143 billion.

Kraft Heinz and Unilever were both up around nine percent after Unilever rejected a $143 billion bid from the USA firm that it said "fundamentally undervalues" the company.

Kraft makes Oscar Mayer meats, Jell-O pudding and Velveeta cheese.

Billionaire investor Warren Buffett keeps getting richer, as Kraft Heinz Co.'s merger bid for Unilever PLC could be heaping another $4 billion onto his pile of money.

"If I was Unilever, I would fight this with hand and fist", said Erich Joachimsthaler, a branding expert who runs the Vivaldi consulting firm. The merger, which is still on from Kraft's side, could be the "biggest deal in recent memory", according to CB Insights.

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Unilever is the fourth largest seller of packaged food worldwide - behind Nestlé, PepsiCo and Mondelez - and Kraft Heinz is the fifth, according to data from Euromonitor International.

Against such as backdrop, Unilever is trying to convince investors that a deal would not make sense.

However, Unilever's board was quick to reject the $50 per share offer, which represented an 18 per cent premium.

Kraft is a food company, purely and simply, with a heavy reliance on USA sales, where price increases are hard to pass on and shopping habits and tastes are seemingly changing by the hour.

If successful, the tie-up would be the biggest acquisition of a British company on record based on offer value.

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Unilever also could try to find a white-knight suitor that it sees as more compatible, according to Stifel Financial analyst Mark Astrachan.

On its part, Unilever perceived that the offer "fundamentally undervalues" the company. Shares fell 2.5 percent in the course of 2016, though European rival Nestle SA fared only marginally better, losing 2 percent in the same 12 months.

Unite national officer Rhys McCarthy said: "Kraft Heinz and their backers' reputation for cost cutting, we believe, will lead to great brands being harmed through job cuts and a never ending drive to push costs down".

Berenberg analysts said such a valuation would imply multiples of 3 times sales and 21 times earnings, "which strikes us as very low". 'Usually Unilever is the one doing the takeovers.

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