City sceptical over P&G bid for Unilever
The Mail reported yesterday on “wild rumours from across the pond” that Cinncinati-based P&G could be lining up a £30-per-share bid to “take out” its major rival, and attached the rumours to a resultant spike in Unilever’s share price, which rose 31p to 1,971p by the end of Tuesday, as against the Friday before.
The paper cited ‘whispers’ stating that P&G had plans in place to circumvent the obvious anti-trust issues associated with any takeover, and accordingly, had already “lined-up Nestlé and Reckitt Benckiser to swallow unwanted parts of the business”.
A Unilever spokesman told FoodManufacture.co.uk that the firm "refused to comment on rumours and speculation", while a P&G spokeswoman also refused to comment on "pure speculation".
Shore Capital analyst Dr Clive Black said: “You always have to be sceptical to a point, and although you can never say never, it’s not something we’re taking extremely seriously at the moment.”
Not enough noise
Black said Shore Capital’s position was that “if there was really anything serious going on there’d be a much larger hoo-ha within the market and a lot more activity on both [firm’s] stocks”.
Unilever shares were trading at 1,969p as we went to press; its current high in the year to date was 2,000p on May 11.
Black added that he thought there would have been more pressure on both companies to divulge information in connection with any deal, if anything was really going on.
Describing any takeover as a “transformational deal in the FMCG [fast-moving consumer goods] sector worldwide”, he said there would be enormous and time-consuming integration costs.
There would also be “huge regulatory challenges” to any deal throughout Europe and the Americas, Black said, as well as a “huge admittance of failure by one side or the other” if anything went ahead."
Rollits corporate finance partner Julian Wild said: "I would have thought that [any prospect of takeover] was extremely unlikely. They are two absolutely massive players, and there's such a dearth of deals around in the food sector at the moment that I think the market is always trying to stimulate some activity."
P&G has a limited profile in food and drink, having sold Pringles to Diamond Foods in a $2.35bn (£1.43bn) deal in early April. Unilever’s brands include Ben & Jerry’s, Bertolli, Bovril, Colman’s, Carte D’Or, Marmite and Knorr.
