Kraft Heinz: How to lose a deal and irritate everyone

By Ashley Armstrong

The inferior British version of Marmite. Photo / 123rf
The inferior British version of Marmite. Photo / 123rf

Marmite: you either love it or hate it. Unless you are Kraft Heinz, in which case you love it and then decide you hate it 48 hours later. Or rather, that you have the "utmost respect" for it.

For the billionaire backers of Kraft Heinz, Warren Buffett and 3G's Jorge Paulo Lemann, their retreat from Unilever is an experience that must put a dent in their reputations as consummate dealmakers.

Just hours earlier a Kraft Heinz insider was bravely briefing "we're not going anywhere" in response to the US giant's commitment. Oops.

The farce will no doubt lead to Buffett re-reading his favourite book, Dale Carnegie's 'How to Win Friends and Influence People'.

Kraft Heinz's approach won it few friends among British and Dutch politicians, and it failed to influence chief-executive-cum-eco-warrior Paul Polman.

The Unilever approach had sparked superficial comparisons to 3G Capital's recent success in its Anheuseur Busch's takeover of SAB Miller. That deal was a lot simpler, however, as it required wooing only two major shareholders, both of which were willing sellers.

Unilever is a different beast. It has a dual structure, a noisy European works council and a long history of social enterprise - all of which would have been threatened if cost cutters extraordinaire 3G had got their way.

It was hard to find a single person in the City who didn't believe Unilever would have been squeezed until the pips squeaked.

Kraft Heinz deserved to be sent packing. Not only had the US bidder offered an insultingly low price, the latest drop in sales at Kraft Heinz was hardly supportive of its ambition for long term sales growth.

Within two years of sealing the Kraft Heinz merger, 3G had cut 7,000 workers and shut six factories in an effort to drive profits up by over a third.

While Unilever might need to slim down its portfolio of brands, it should not be starved.

- Daily Telegraph UK

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