Kraft Heinz executives took the decision following comments by Unilever CEO Paul Polman were made public, indicating reservations about the corporate culture at Kraft Heinz and the fact that the bid undervalued the food, household and personal care player.
Pollman warned that Kraft Heinz was focused on a corporate culture of cost-cutting, which did not fit well with many of Unilever’s higher end brands, according to a Wall Street Journal report, which cited people familiar with the negotiations.
Kraft Heinz 'not experience' in personal care
The report also stated that Pollman had stressed the point that Kraft Heinz executives also have limited experience in managing a portfolio that includes an extensive number of cosmetic and personal care brand.
“Unilever and Kraft Heinz hereby announce that Kraft Heinz has amicably agreed to withdraw its proposal for a combination of the two companies,” the two companies announced in an official communication released on Sunday.
“Unilever and Kraft Heinz hold each other in high regard. Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever.”
Unilever officially rejected the Kraft Heinz $50-a-share-bid on Friday, which led to Kraft Heinz executives officially announcing that it would withdraw from the bidding process on Sunday.
Investors turn attention to other personal care players
Investors had been enthused by the prospect of such a massive merger, which had led to a rally on Unilever share prices, but after Kraft Heinz pulled out of the bidding process, Unilever share prices continued to fall during trading on Monday, after rallying at the end of the week.
However, contrary to Pollman’s comments that personal care might not be a good fit for the Kraft Heinz business portfolio, it seems that the investment world has other ideas, as share prices in other major multinational players have rallied.
Shares in Clorox rose by 3% by the close of play on Friday, after Unilever had rejected the bid, while shares in Colgate-Palmolive and Kleenex both rose by 4%.