Co. (KHC) confirmed on Friday that it has made offer to buy
Europe’s Unilever (UL) for $143 billion. Kraft Heinz said that
talks are ongoing, but that no deal can be assured. However, in a
statement rejecting the offer, Unilever said the deal
“fundamentally undervalues” the company. Unilever rejected the
proposal as it sees no merit for Unilever’s shareholders. Kraft
Heinz offers value at $49.61 for each Unilever share, an 18%
premium to the stock price on February 16 before the deal was
disclosed. The shares of both companies are up sharply before the
opening bell. Unilever has a market capitalization of nearly $127
billion, while Kraft Heinz is valued at $107 billion. A deal would
unite two of the world’s biggest suppliers of consumer (especially
food) products. Kraft Heinz’s brands include Oscar Mayer, Velveeta,
Planters, Jell-O and Maxell House. Unilever makes Dove soap, Lipton
tea and Ben & Jerry’s ice cream, among its more than 400
brands. For Kraft Heinz, buying London-based Unilever would expand
its global presence. Kraft Heinz gets 79% of its revenue from North
America, 9% from Europe and 12% from the rest of the world. By
contrast, a growing percentage of Unilever’s business is in
emerging countries such as Brazil, India and Indonesia.” It is
believed that Kraft Heinz has very strong financial backing for the
deal. Figure 1 below illustrates the stock returns from the January
3, 2017 (beginning of the year) to February 17, 2017. On February
20, Kraft Heinz decided to drop the offer because of Unilever’s
rejection. On February 21 2017, the first trading day after these
announcements, Unilever’s stock price decreased 7.58% to
$45.09.
- New York Cbs Ap Feb 17 2017 U S Food Giant Kraft Heinz Co Khc Confirmed On Friday That It Has Made Offer To 1 (64.3 KiB) Viewed 34 times
Based on the Figure 1, was leakage of insider information
likely?
Should insidertrading be allowed?
What are the duties of a company secretary in preventing insider
trading?
Return relative to Jan 3 2017 -0.05 0.05 0.1 0.15 0.2 0.25 0 Figure 1: 3-Jan-17 5-Jan-17 7-Jan-17 9-Jan-17 11-Jan-17 13-Jan-17 15-Jan-17 17-Jan-17 19-Jan-17 21-Jan-17 Date 23-Jan-17 25-Jan-17 27-Jan-17 29-Jan-17 31-Jan-17 2-Feb-17 4-Feb-17 6-Feb-17 Stock Returns: Jan 3, 2017 to Feb 17, 2017 (Standard & Poor's 500 - dotted line): January 3 2017 to February 17 2017. Stock Return of UL (Unilever - solid line), KHC (Kraft Heinz - dashed line) and SP 8-Feb-17 10-Feb-17 12-Feb-17 14-Feb-17 16-Feb-175 UN + KHC SP