Click the image for details Let's first review yesterday's content: Kraft Heinz proposed to acquire Unilever at $50 per share in cash and stock. The acquisition would value Unilever at over $140 billion, a 20% premium over Unilever's closing price on Thursday, February 16. Unilever responded: This completely undervalues Unilever. Looking closer at the official response, the attitude is not a definitive rejection of Kraft Heinz. Unilever stated that for its shareholders, this acquisition offers no financial or strategic benefits. Unilever also indicated there is no basis for further negotiations. Although Unilever rejected the proposal, Kraft Heinz still hopes the deal can be reached, and stated: "There can be no certainty that any further proposal will be made to the Board of Unilever, or as to the terms of any such proposal, or that any agreement will be reached." Wall Street analyst Geoff Colvin said that when 3G Capital (the backer behind Kraft Heinz) bought Anheuser-Busch and SABMiller, both companies initially rejected the offers, but were eventually acquired. Unilever seems to be no exception. So, is Kraft Heinz's acquisition of Unilever premeditated or baseless? Is there potential for business cooperation between Kraft Heinz and Unilever? If merged, do they have common interests? Is Kraft Heinz determined to acquire Unilever? Don't worry, we'll analyze step by step. Comparison of the two companies' basic situations From the perspective of their business scope: Kraft Heinz: Kraft Heinz is the world's fifth-largest and North America's third-largest food and beverage company, with 8 brands each generating over $1 billion in annual revenue. It has a long history in manufacturing and operating infant products, with a sales network spanning the globe. It entered the Chinese market in 1984, establishing China's first infant food joint venture in Guangzhou. Its products include condiments, complementary foods, snacks, as well as pregnant women's milk powder and infant formula. Unilever: Everyone is familiar with Unilever (a British-Dutch company). It operates in personal care, water purifiers, home care, and food and beverages, producing and selling over 1,000 brands globally. Well-known brands in China include Lux, Dove, Omo, Lipton, Comfort, Clear, Zhonghua, and Wall's. If Kraft Heinz and Unilever become one family, they would create the world's second-largest FMCG giant with annual sales of $85 billion, second only to Nestlé. Financial Times: After Kraft Heinz + Unilever, its scale surpasses PepsiCo and Coca-Cola, ranking only behind Nestlé. From the comparison of the two companies' data: After Kraft and Heinz merged in 2015, CEO Bernardo Hees actively cut costs and adjusted corporate management style. However, the trend of European and American consumers pursuing health has made life difficult for Kraft Heinz, whose core business is packaged food. Although they have made adjustments, such as removing artificial colors from recipes and creating new brands, the Q4 2016 earnings report released on February 15 showed a 3.7% year-over-year decline in net sales. Although Unilever's performance in global emerging markets has been poor recently due to currency fluctuations and rising commodity prices, compared to Kraft Heinz, they are much more active in these markets. In the packaged food sector, Unilever's market share in Latin America and the Middle East & Africa is three times and four times that of Kraft Heinz, respectively. In terms of employee numbers, Unilever has 168,000 employees globally, while Kraft Heinz, after several rounds of layoffs, now has only 41,000 employees. Key points from foreign media analysis

  1. Reuters, citing sources familiar with the matter, said Kraft Heinz approached Unilever earlier this week. The company believes it is important to invest in innovation for the combined company. Kraft Heinz also proposed maintaining three headquarters in the US, UK, and Netherlands.
  2. The Guardian, citing sources familiar with the negotiations, said that even if Kraft Heinz raised its offer, it is unlikely to succeed because Kraft Heinz has an "opportunistic element"—the stock market rally since Trump took office has inflated US company stock prices. "They have been waiting for the right opportunity, but the lack of logic in the deal may render it useless."
  3. Bloomberg, citing sources familiar with the matter, said Unilever executives are concerned about Kraft Heinz's tendency to cut costs and lack of vision for nurturing brands. Kraft Heinz also lacks experience in managing home care and personal care businesses, which account for nearly 60% of Unilever's revenue. Unilever's management previously believed the two companies were very different and did not expect Kraft Heinz to make a move.
  4. Bloomberg, citing people with direct knowledge, said after Unilever's stock surged, Kraft is likely to raise its bid. Another source familiar with the matter said acquiring Unilever would depend on financing from Kraft's other major shareholder, Warren Buffett's Berkshire Hathaway.
  5. StreetInsider, citing sources with direct knowledge, said Kraft Heinz is now discussing acquiring part of Unilever's business rather than the whole company.
  6. Reuters, citing industry analysts, said Kraft Heinz may not want Unilever's home and personal care brands, or may divest them, continuing to focus on the food sector. Food now accounts for only about 38% of Unilever's revenue.
  7. Unite, the UK's largest trade union, said it is seeking an emergency meeting with Unilever's senior management, hoping to get assurances that Unilever will resist Kraft Heinz's "predatory" acquisition. The union believes Kraft Heinz and its backers are known for cost-cutting, through layoffs and relentless pursuit of lower costs, which they believe will harm Unilever's brands.
  8. Jonathan Feeney, an analyst at Consumer Edge Research, said this deal would become a key strategy for Kraft Heinz because it would expand Kraft Heinz's international reach, allowing it to gain long-term growth opportunities in global developing markets.
  9. Analysts at Edison Investment Research in London said if you put these two companies together, you'll find how complementary they are geographically. With Unilever, Kraft Heinz could become a company with business extending into home care and personal care.
  10. Reuters believes Unilever itself faces many challenges. On January 26, its stock fell 4.5%, the biggest drop in nearly a year, when it reported lower-than-expected Q4 results, showing slowing sales and currency fluctuations. Sources say it was this stock decline that encouraged Kraft Heinz to subsequently propose the acquisition. Reuters: Unilever stock price chart
  11. Wall Street analyst Geoff Colvin, writing on Fortune's website, believes 3G's ambition for the food industry is the same as its ambition for the beer industry: to build a dominant global giant. In its view, Kraft Heinz's next-stage goals are twofold: continue cutting redundancies and gain consumers in non-US markets, especially emerging markets, and Unilever can help achieve that. Under UK takeover rules, Kraft Heinz must give a final offer by March 17 at the latest, or abandon the merger. In any case, the capital markets seem to look forward to this merger. After the news came out, Unilever's stock rose 12.2% in London, while Kraft Heinz's stock rose 7.3% in New York. Unilever stock price increase chart Kraft Heinz stock price increase chart We'll wait and see what happens next. Vote to tell us or write your prediction in the comments below! This article is compiled and edited by -END-