As the clock moved toward a deadline for a takeover, Kraft Heinz is facing a difficult battle in trying to get Unilever to begin negotiating.
Publicly, Unilever decried the buyout offer of $143 billion for Kraft as not having merit and has said there was not a basis for additional talks.
However, sources behind the scenes said that executives at Unilever have worried over the penchant of Kraft for cutting costs and a lack of vision in cultivating brands.
Kraft lacks experience as well in managing personal care and home businesses, which represent close to 60% of the revenue for Unilever, said those familiar with the situation.
While the two companies both sell food, Unilever pursued brands that are higher-end, like Talenti gelato and Ben and Jerry’s ice cream. Meanwhile, Kraft sells Jell-O and Velveeta cheese.
One branding expert said that if he were Unilever he would fight to make sure the takeover did not move forward.
Though the bid of $50 per share was publicly rejected by Unilever on Friday, Kraft said it was still in pursuit of a deal. The prospect of the two coming to an agreement helped move Unilever shares skyward by 13% to a new record high.
The Anglo-Dutch conglomerate, which is the maker of Dove soap and Hellmann’s mayonnaise at present, has a value of over £114 billion or $142 billion.
The rally will more likely mean that Kraft will have to increase its bid, said one person with inside knowledge of Kraft’s intentions.
Kraft’s shares were also higher after the news was released climbing over 11%. That puts a value on the food giant at over $117.5 billion.
Acquiring Unilever would be dependent upon financing from the largest investor of Kraft, Berkshire Hathaway, which is owned by billionaire investor Warren Buffett.
Against that thought, Unilever is attempting to convince its investors that a deal does not make any sense. The company for some time has spoken to shareholders about why it is best it remains like it is today, a stand-alone business. It argues that there were not that many synergies amongst the two companies.
The approach by Kraft Heinz, which was unsolicited, surprised Unilever, said the company. Its executives did not expect Kraft to submit an offer because they considers the two companies vastly different, said those familiar with company officials.
Unilever’s focus is less on food and it has spent a number of years acquiring brands that appeal to the millennials including Seventh Generation and Dollar Shave Club.