More speculation over potential Kraft Heinz bid for Palmolive-Colgate

12-Jun-2017 - Last updated on 22-Jul-2019 at 11:30 GMT

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Euromonitor International has released further comment on the potential offer from Kraft Heinz for Colgate-Palmolive, a topic that has been the subject of speculation by industry commentators in recent weeks.

Seeking Alpha and TheStreet.com have both recently reported that the company is considering an offer for Colgate-Palmolive, following an earlier report in May by the The New York Post that said the company is open to a deal at $100 a share.

Colgate-Palmolive, co-headquartered in Pittsburgh and Chicago, held a stable share of 3.6% in the global beauty and personal care industry over 2011-2016, and is the fourth largest company in the industry.

Raphael Moreau, food analyst with Euromonitor, a market research provider, has spoken about why Kraft Heinz is likely to make a bid, and what it could mean. The analyst also considers Unilever as a potential bidder.

Analyst’s perspective

“As Colgate-Palmolive is willing to be approached by a buyer, Kraft Heinz and Unilever are among the most likely bidders for the company,” Moreau notes.

“Following the recent rejection of its merger offer by Unilever, Kraft Heinz, could seek a deal with Colgate-Palmolive with the backing of 3G Capital in order to diversify its brand portfolio and rely less on its core low margin food categories, while extending its global distribution reach.”

The analyst suggests, however, it is Unilever that would be the better fit to make such an acquisition, noting: “Colgate-Palmolive may see a better strategic fit and greater potential for synergies in pursuing an alliance with Unilever, if such an offer was on the table.”

Toppling L’Oréal’s dominace

According to fellow Eurominor analyst, Nicholas Micallef, a move from another big personal care player to acquire Colgate-Palmolive would likely see L’Oréal lose its top spot.

“Should the likes of P&G or Unilever make a move, L’Oréal’s position at the helm of the industry would be short-lived (following P&G multi-brand divestment to Coty),” he confirmed recently.

“Nevertheless, L’Oréal may have little interest in such a move, as it does not play in oral care, and hence tends to exclude oral care players when evaluating its strength and position in the beauty industry.”