More speculation over potential Kraft Heinz bid for Palmolive-Colgate

By Lucy Whitehouse contact

- Last updated on GMT

More speculation over potential Kraft Heinz bid for Palmolive-Colgate

Related tags: Henkel

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.”

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