Fresh from bid excitement created by Kraft Heinz’s (NASDAQ:KHC) opportunistic and swiftly-withdrawn £115bn bid, Unilever plc (LON:ULVR) could embark on a defensive merger with one of its smaller rivals.
At least this is one of the scenarios posited in a note by Deutsche Bank, which is broker to the Marmite and Dove soap maker.
Deutsche believes Unilever would find a ‘kindred spirit’ in Colgate, the American toothpaste maker.
A merger with Reckitt Benckiser Group plc (LON:RB.) might also be a possibility, but the ‘story is now complicated’ by Reckitt’s proposed takeover of Mead Johnson (NYSE:MJN). A bid for Henkel, while a little left-field, may have some merits, Deutsche concludes.
The note, which reiterates the broker’s ‘buy’ recommendation and upgrades the price target to 49 euros a share from 44, was penned following a short statement from Unilever earlier this week saying it planned a comprehensive review of the business.
Deutsche concedes that a merger or takeover might be a tad radical and believes the investing public is more likely to witness the company’s long-awaited exit from the spreads market (think Stork and ‘I Can’t Believe It’s Not Butter’).
And of course an easy win would be a renewed focus on margins.
Story by ProactiveInvestors