Unilever's market capitalisation is now more than £124bn, suggesting Kraft Heinz would have to pay hundreds of billions to acquire the company.
10% Owner, BERKSHIRE HATHAWAY INC, purchased 325,442,152 common shares of The Kraft Heinz Company (KHC) in the open market.
The US food giant, whose brands range from Heinz Tomato Ketchup and Philadelphia cheese, now has until March 17 to table an official bid. Kraft Heinz is not giving up however and will continue to negotiate, Reuters reports. The value of Buffett's stake in Kraft Heinz in today's dollars, with its shares close to $94, is about $30.6 billion. The stock gained a consensus recommendation of 1.42 on Zacks Investment Research where the scale runs from 1 to 5, 1 representing Strong buy and 5 showing Strong Sell.
Kraft is a food company, purely and simply, with a heavy reliance on US sales, where price increases are hard to pass on and shopping habits and tastes are seemingly changing by the hour. The stock appeared $91.30 above its 52-week highs and is down -2.78% for the last five trades. The third largest holder is Capital World Investors, which now holds $3.23 billion worth of this stock and that ownership represents almost 3.03% of its market capitalization.
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The offer comes less than a month after the London-listed firm reported a decline in full-year revenue, due to a combination of currency headwinds and hard market conditions in its Indian and Latin American operations. The company laid off 106 workers last April.
Unilever is the world's fourth-largest consumer goods company by sales, pulling in €52 billion ($55 billion) in revenue previous year. The stock's current distance from 20-Day Simple Moving Average (SMA20) is -2.25% where SMA50 and SMA200 are 0.06% and 1.53% respectively.
Potential headcount reduction was also flagged by John Colley, a professor of practice at Warwick Business School: "The main benefits from such a deal would be major cost reduction as head offices and regional management could be merged". The PEG ratio represents the ratio of the price to earnings to the expected future growth rate of the company. Unilever rejected the $50 per share offer, saying that it was too low. If you are accessing this article on another website, it was illegally copied and republished in violation of US & worldwide copyright legislation.
Hedge funds have recently modified their holdings of the company. Additionally, Deutsche Bank Upgrade its ratings on the stock to Buy. The company was valued at about £111bn. Finally, Archford Capital Strategies LLC increased its stake in The Kraft Heinz Company by 7.6% in the fourth quarter.