Advisers in Kraft's $143 Billion Bid for Unilever Fit Familiar Strategy
February 19 2017 - 8:48AM
Dow Jones News
By Ben Dummett
Kraft Heinz Co.'s $143 billion unsolicited bid for Anglo-Dutch
rival Unilever PLC took investors by surprise, but the identity of
advisers working on the megadeal likely didn't.
Lazard is advising Kraft Heinz while Centerview Partners is part
of a group of banks in Unilever's corner.
Based on past relationships with the two consumer behemoths and
a proven knowledge of the sector, both advisers look like they were
shoo-ins.
Companies often use the same investment banking firms or
particular bankers who they have worked with on previous deals
because of their intimate knowledge of a firm's corporate strategy.
Targets of hostile attempts may also use banks that had previously
worked with the bidder to take advantage of their familiarity with
the aggressor to help mount a defense. Both trends are evident in
the Kraft Heinz-Unilever case. Lazard and Centerview have worked on
past deals involving the Pittsburgh- and Chicago-based Kraft Heinz
or its predecessor companies. Centerview, meanwhile, knows Unilever
as it worked with the London- and Rotterdam-based company on its $1
billion deal last year to acquire Dollar Shave Club, the mail-order
service for disposable razors and other grooming products.
Lazard's relationship with Kraft Heinz, which is known for such
household brands as Oscar Mayer and Heinz ketchup, can be traced
back to 2009-2010 when the investment bank worked with its
predecessor company Kraft on its GBP9.9 billion ($12.29 billion)
acquisition of Cadbury PLC, the U.K. chocolate maker. That deal
came under scrutiny at the time after U.K. regulators accused Kraft
of reneging on its promise to keep a factory open.
That said, Lazard's relationship with 3G Capital Partners, the
Brazilian private-equity firm tied closely to famed investor Warren
Buffett, appears to be a big part of its current mandate to help
Kraft Heinz win over Unilever. The global investment bank, whose
roots date back to the 1840s as a dry goods merchant in New
Orleans, helped 3G and Mr. Buffett's Berkshire Hathaway Inc. in
2013 acquire H.J. Heinz for $23 billion. That deal helped 3G
establish a platform for future food industry acquisitions that
would take advantage of its focus on cutting excess costs of
targets to boost returns. About two years later, Lazard advised
Heinz on its merger with Kraft.
Now, Kraft Heinz is betting Lazard can help it complete what
would be the second-largest international deal in history after
Vodafone Group PLC's $172 billion acquisition in 1999 of
Mannesmann, according to Dealogic. Lazard has proven it can do
complex, global deals, advising Anheuser-Busch InBev NV on its $100
billion-plus takeover of rival brewer SABMiller PLC. It is also an
adviser to Reynolds American Inc. on its planned deal announced
earlier this year to be acquired by British American Tobacco PLC
for $49 billion.
Still, the Unilever transaction is far from certain. On Friday,
the consumer giant, behind brands such as Dove soap and Ben &
Jerry's ice cream, rejected the offer. And any agreement would come
under close scrutiny by antitrust regulators, as well as by
governments in the U.K. and elsewhere, worried about potential job
losses resulting from a deal.
From Lazard, Kraft Heinz is relying on William Rucker, the
investment bank's chief executive in London, and Will Lawes, who
joined the firm in January to advise the biggest public companies
listed on the London Stock Exchange. Mr. Lawes was previously
executive chairman at Freshfields Bruckhaus Deringer, a global law
firm.
Sitting across the table, if the two sides get that far, will be
Unilever's bankers from a group of firms including Centerview
Partners that also know Kraft Heinz's predecessor companies.
Centerview, considered among the premier boutique investment banks,
advised Heinz on 3G's takeover bid for the consumer company in 2013
and then worked with Kraft when it announced its merger with Heinz
in 2015. It also had an advisory role to SABMiller in its deal with
AB InBev and to BAT in the Reynolds transaction.
Centerview bankers working with Unilever include Nick Reid, who
also worked as an adviser to BAT on the Reynolds deal. Unilever's
other bankers include Morgan Stanley, one of the advisers to Mead
Johnson Nutrition Co. on its deal announced this month to be
acquired by Reckitt Benckiser Group PLC, UBS, an adviser to BAT on
the Reynolds deal, and Deutsche Bank, who was also adviser to BAT
on the Reynolds deal and to Reckitt on the Mead transaction.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
February 19, 2017 08:33 ET (13:33 GMT)
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