Kraft's shock bid triggers Unilever focus on short-term value

Fri Feb 24, 2017 11:39am EST
 
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By Paul Sandle

(Reuters) - Kraft Heinz's (KHC.O: Quote) bid has jolted Unilever (ULVR.L: Quote) into focusing more on delivering on its strategy in the short-term, the Anglo-Dutch company's finance chief said on Friday.

Graeme Pitkethly said Kraft's offer had highlighted the importance of achieving a balance between long-term sustainable value, which it had prioritized, and short-term delivery.

"This has certainly been a trigger moment for Unilever, and we will not waste it," he said at the Consumer Analyst Group of New York conference in Boca Raton, Florida, in a presentation streamed on its website.

The U.S. company walked away from a fight with Unilever on Sunday, just two days after its $143 billion bid - and Unilever's rejection - was made public.

Kraft, which is backed by Warren Buffett and the private equity firm 3G, wanted to buy Unilever as part of its strategy to become a leading consumer goods giant by buying competitors and cutting costs and jobs to drive profits.

The approach caused Unilever, which makes OMO detergent and Magnum ice cream, to announce a far-reaching review on Wednesday, seeking to show shareholders it could realize the value spotted by its rival.

Pitkethly said he believed Unilever could do more to communicate the value buried within its existing plans, while the review would look at options for the group's portfolio, organization, cost structures, balance sheet and use of cash.

He said Kraft had taken advantage of a recent widening gap between Unilever's share price and the sector average, caused in part by a weak outlook for markets like India and Brazil.   Continued...

 
The company logo for Unilever is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 17, 2017.     REUTERS/Brendan McDermid/File Photo