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Is Unilever ready to pounce on Colgate after Kraft Heinz bid?

Friday, February 24, 2017 3:16
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Fresh from bid excitement created by Kraft Heinz’s (NASDAQ:KHC) opportunistic and swiftly-withdrawn £115bn bid, Unilever plc (LON:ULVR) could embark on a defensive merger with one of its smaller rivals.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.

READ – Kraft Heinz catches investors on the hop with opportunistic £115bn bid for Marmite maker Unilever READ – Some added sauce – Unilever bid defence includes former Heinz Kraft adviser

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


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