Unilever

Unilever

28 June 2017Reading time: 3 minutes

Unilever is one of the biggest consumer goods companies in the world and knows a rich history. On January 1, 1930, Unilever was formed after the Dutch Margarine Unie merged with the British soap manufacturer Lever Brothers. Partly because of this Unilever is nowadays contained in the AEX in Amsterdam as well as in the
FTSE in London.

 

Earlier this year Kraft Heinz tried to takeover Unilever. The Americans made an offer on February 17 of USD 143 billion, which comes down to USD 50 per stock and a premium of 18% on top of the closing price of Unilever the day before. Thereafter the news caused the stock price to increase the same day with more than 13%.    



What is special about this takeover is that Kraft Heinz's turnover is half the size smaller compared to Unilever. In 2016 Unilever realized a turnover of more than EUR 53 billion, while Kraft Heinz did not go beyond EUR 26 billion. The Americans however did had enough financial resources thanks to the shareholders 3G from Brazil and Warren Buffett.


 

Almost immediately Unilever rejected the offer and suggested that there was no financial as well as strategic benefit for their shareholders. 


 

The last few months it became clear that the Kraft Heinz acquisition attempt, made Unilever think about its strategy. With CEO Paul Polman Unilever focused more on sustainable and slow growth. The consumer goods company wanted to distinguish itself by sustaining their product portfolio, but because of Kraft Heinz this
strategy was partly abandoned. Just like their competitors Unilever is now focusing more on profitability. (source:The Guardian)


 

Early April Unilever presented a series of plans to compensate the shareholders. Unilever has proposed to increase the dividend with 12% to EUR 0,3585 per stock and will buy for EUR 5 billion of their own stocks. This program started on May 18. To finance these plans Unilever put their margarine division up for sale. They prefer to sell the division, although a IPO is also not excluded when the offered prices prove too low by Unilever. (source: Unilever press release)

 

 

A few weeks later Unilever presented the first quarter results. The total turnover increased on an annual basis with 6% to EUR 13,3 billion. Disregarded of the exchange rate effects and changes within the product offering, the growth was 2,9%.

 

To empower the independency Unilever could continue to look for promising acquisitions. Analysts don’t expect that Unilever will try to realize a large takeover of a similar company such as Colgate-Palmolive. In May the American consumer goods company announced to be willing to sell the company for USD 100 per stock, when the stock price was about USD 71.

 
The rejection of the acquisition attempt by Kraft Heinz led to a stock price fall for Unilever of 5,4% at the 20th of February. Soon enough though the stock price recovered and this upward trend continued for the last few months
towards EUR 50. Analysts are mostly positive about this investment, while the issued price targets are between EUR 38 to EUR 57. However, the future development need to be seen.

 
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18/10/2019 16:14:57