That was awkward. The barbarians are at the gate. Two days later they’ve sloped home - on cattle class no doubt - blunt clubs back in their bags, tails between legs.
We had expected a war of attrition. We’ve seen it so many times. A lowball offer opportunistically timed. And then a sustained series of small improvements in the terms, targeted at the weakest points in Unilever’s defence - its investors.
The Kraft-Heinz-Buffett-3G mob must surely have known this would go hostile. The clash of cultures was palpable. Unilever, which can trace its philanthropy roots back to Port Sunlight, one of many enlightened Quaker-based food businesses (another was Cadbury, of course) - was never going to accept its entreaties without a fight. Its CEO, Paul Polman, is as close to a hippy as a FTSE-100 boss gets. And even when Unilever is being hard nosed (it certainly isn’t hippy enough for Ben & Jerry) it has a very European sensibility. Kraft-Heinz, on the other hand, operates with a bottom line at all costs approach, and is as American as… a Hellfire Missile. Clever but explosive.
It’s certainly had an effect on Unilever, though. This week a “comprehensive review of options available to accelerate delivery of value” was announced. That could mean taking a leaf out of the Buffett/3G book, piling on debt (to fund extra dividends) or cutting capex, jobs and costs (though it already employs so-called zero-based budgeting). It could mean more personal care acquisitions, to bump up its valuation multiples, though Polman has not exactly been a slouch in that area, buying (among others) Sara Lee, Alberto Culver, Kalina, Camay, Ren Skincare and Dollar Shave Club since he took over in 2009.
It could mean trying a little harder to achieve so-called Sprexit - an exit from its spreads business. Or will he really grab the bull by the horns and sell the entire food business, a move he’s reportedly been contemplating for years? That would further boost valuations - and give Polman the funds for a megadeal like Colgate-Palmolive. But having so decisively shut the gates, wouldn’t that just let Buffett & Co back in? Decisions, decisions. One thing’s for sure: Polman must act. And fast.
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