By mid-morning on Friday, they were proved correct. The FT’s Alphaville blog revealed the details of the Kraft Heinz bid. Within half an hour, the US company confirmed it had “made a comprehensive proposal to Unilever about combining the two groups”. It added that the offer had been rejected but suggested that the door was still open.
Unilever slammed the door shut an hour later. In an unusually terse rejection, it said the Kraft Heinz offer “fundamentally undervalues” the company and that the proposal had “no merit, either financial or strategic”.
Kraft Heinz had expected its first offer to be rejected but was caught off guard by the harsh language Unilever used. “Everyone thought there was a relationship of mutual respect but clearly they went out strong on the culture stuff . . . making Kraft Heinz look like the bad guy and Unilever as the angel,” a person close to the US company said.
Kraft Heinz’s advisers at Lazard and law firm Paul Weiss, its top management and 3G executives regrouped later on Friday to find a new way forward. Additional advisers including PR companies Finsbury and Joele Frank were brought on. Shares in both companies soared to close the week. The US group was willing to pay substantially more.
However, more fissures appeared. UK politicians started voicing their concerns about another large British-based company being scooped up on the cheap by a foreign rival. Unilever could have ended up becoming the third major UK company to be acquired since the Brexit vote after chip designer ARM Holdings and pay-TV broadcaster Sky.
Under strain ahead of negotiations with the EU, the May government has further pigeonholed itself with its tough talk on a strong industrial policy that protected British companies and jobs. Shuttling between London and Paris to deal with the fallout of a proposed Peugeot-Vauxhall deal that could see thousands of jobs shed, Greg Clark, UK business secretary, spoke with Mr Behring and Sue Garrard, head of communications at Unilever.
Downing Street instructed officials to look at Unilever’s business in the UK and whether a Kraft Heinz bid would raise any policy issues, including over the future of the company’s British headquarters, its UK listing, jobs, and research and development.
Back in London on Saturday, as Mr Polman tapped into his network of contacts, he was informed that Finsbury was working with Kraft Heinz on PR. Within seconds, Mr Polman blasted off an email to Sir Martin Sorrell, the founder and chief executive of WPP, the advertising company that counts Unilever as one of its most important clients.
Finsbury, which is majority owned by WPP, was removed from the Kraft Heinz side by the end of the day.
