UN Unilever NV

By Anne Steele and Saabira Chaudhuri 

Kraft Heinz Co. has made a $143 billion takeover approach to U.K consumer products giant Unilever PLC, a move that would bring together some of the best-known consumer-facing brands in the world.

Kraft Heinz said Unilever has declined the proposal, but that "we look forward to working to reach agreement on the terms of a transaction."

The U.S.-based food and beverage maker said it is uncertain that any further formal proposal will be made to Unilever. It also said the terms of any such transaction are uncertain.

In a statement Friday, Unilever said the proposal was for $50 a share, in a mix of $30.23 in cash payable in U.S. dollars and 0.222 share of the combined new company. It said that offer valued Unilever at about $143 billion. Unilever recommended shareholders take no action.

Shares of Unilever rose more than 14% in London trading, giving the company a market value of GBP109.8 billion, or $136.4 billion, according to FactSet. Shares of Kraft Heinz rose 5.6% to $92.19 in premarket New York trading; at that level, it has a market value of about $112 billion.

According to British takeover rules, Kraft has until March 17 to announce a firm intention to make a specific offer, or walk away. Apart from persuading management and antitrust regulators around the world on the merits of a sale, the U.K. and Dutch governments will also likely weigh in. The offer comes ahead of an election in the Netherlands, where Unilever has deep roots. Neither government had publicly responded Friday on the news.

A union would bring together brands like Kraft Heinz's namesakes as well as Oscar Mayer hot dogs, Planters peanuts, Philadelphia cream cheese and Maxwell House coffee with Unilever's Dove soaps, Axe body sprays, Hellman's mayonnaise, Lipton teas and Ben & Jerry's ice cream. Unilever has increasingly been pushing into higher-end personal care, making a series of acquisitions like its 2016 deal to buy Dollar Shave club for $1 billion.

Consumer-goods firms are struggling with headwinds they have little control over: fluctuating exchange rates, rising commodity prices that often feed into packaging or ingredient costs and tepid global economic growth that has weighed on sales. All that has sharpened the focus on the few things executives can still influence: costs and nimbleness in meeting fast-changing consumer tastes.

At Unilever, the world's second-largest consumer-goods firm by sales after Procter & Gamble Co., sales growth slowed last year, spooking investors and underscoring the cost-cutting pressure that companies face as they struggle to sell more of their staples, from soap to packaged food, around the world.

Kraft Heinz, meanwhile, has struggled with sales declines in the U.S. and Europe, where consumers are buying food they view as fresher and more natural. The company has responded by removing artificial colors from foods like Kraft's famous blue-box mac-and-cheese, and creating a new brand of frozen meals aimed at using trendier ingredients to attract younger consumers.

Write to Anne Steele at Anne.Steele@wsj.com and Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

February 17, 2017 08:48 ET (13:48 GMT)

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