Lord Myners Urges Unilever Protection While Company’s Portfolio Value is Double Kraft Heinz

20 Mar 2017 --- British businessman and politician Lord Paul Myners has got involved with the debate about Unilever, urging the UK government to toughen up rules in order to protect companies from foreign takeover bids, just after boss Paul Polman called for the takeover code to be strengthened.

Last week, FoodIngredientsFirst reported how Unilever boss Polman urged the government to bolster the UK rules relating to takeover bids, saying that companies should be given more time to defend their position in the event of an approach, in the Financial Times. He said “there needed to be a level playing field” and the government should look after “national treasures”, referring to companies such as Unilever.

Now Lord Myers is weighing in on the debate by writing in The Sunday Telegraph yesterday (March 19) heaping criticism on Prime Minister Theresa May for failing to protect “prize assets”, referring to Unilever as a UK employer of thousands which should be supported from “opportunistic dealmakers”. 

Lord Myers comments follow the failed takeover bid from Kraft Heinz earlier this year when Unilever fought off the US$143 billion approach. Kraft Heinz withdrew its bid just two days after the approach became public and Unilever’s opposition to engage in discussions. 

“The UK’s takeover rules are the most permissive in the world. They do nothing to discourage the likes of Kraft Heinz seeking to buy businesses to turn a quick profit. Does the Government really believe this constant garage sale is good for the national economy and society at large?” he writes. 

The former chairman of Marks & Spencer also said that companies should be given more time to prepare vital defenses against takeover deals. 

Unilever is considering its next move after the failed Kraft Heinz takeover bid, with an official statement from the Group saying it is currently conducting a review of options due to be completed next month. 

Amongst its options is a potential cull of some of its food brands, according to city reports which claims the Anglo-Dutch consumer goods company is feeling the pressure to react after it rejected the offer. Speculation is mounting as to what Unilever’s next move will be with some reports angling towards a break-up of the company or sell-off or shake-up of some well-known brands like Bertolli and Flora.

The spreads alongside I can’t Believe it’s so Good - known as I Can’t Believe it’s not Butter until earlier this year when it rebranded itself as a more versatile product, appealing to consumers as a baking and frying ingredient with a lower saturated fat as well as a spread - are not doing so well.

Value of Unilever Brand Portfolio more than Double Kraft Heinz
Meanwhile, valuation and strategy consultancy Brand Finance has valued the brands of thousands of the world’s largest companies with 50 of the most valuable food brands included in “Finance Food 50”.

Combining the values of these brands based on ownership reveals the brand portfolio values of the FMCG corporate giants. Unilever’s total portfolio value is US$42.9 billion, more than double that of Kraft Heinz.

Dozens of its brands, such as Marmite, Colmans and PG Tips, have achieved ‘national treasure’ status in the UK and beyond. So when Kraft Heinz (whose brand portfolio is worth just US$20.2bn) launched its bid, there was widespread surprise and trepidation, say Brand Finance. Eyebrows were raised in UK government circles and the upper echelons of business too, as the bid appeared to confirm the vulnerability of British firms to takeover by foreign counterparts following the Brexit vote, according to Brand Finance.

“Unilever has one of the world’s most valuable brand portfolios, more than double the value of Kraft Heinz. Quantifying this and bringing it to the fore will be key to defending any future bids or ensuring that shareholders receive fair value,” says Brand Finance’s CEO David Haigh.

According to Finance Food 50 2017, Nestle tops the table with a brand value of US$19,416, followed by Danone (7,894), Kellogg’s (7,068), Kraft (5,631),Heinz (5,292) and Unilever is in eighth place in the table. 

In general, the last year has proved challenging for food brands. Brands with significant confectionery lines have had the most difficulty as concerns around health eat into revenues. Kraft, Hershey’s, Mars and Nestle have lost 4%, 10%, 14% and 17% of their brand value this year respectively. This trend is global, with Chinese snack food manufacturers Want Want and Master Kong dropping significantly too. Kellogg’s brand value has dropped 3%. Demand for cereal is faltering as consumers explore a wider variety of breakfast options.

The dairy segment is holding up a little better than the food sector as a whole. This year’s fastest growing food brand is Australia’s largest dairy brand, Devondale. Its brand value is up 35% year on year to US$1.5 billion. Devondale’s growth is the result of changing consumer tastes and growing demand in South East Asia. Asia’s growing taste for dairy bodes well for Yili. It is barely known in the West, but thanks to marketing initiatives such as sponsorship of China’s Olympic team, it scores very highly on brand equity measures such as Consideration, Familiarity and Recommendation in China, its domestic market. Yili is now the world’s second most valuable (and the strongest) dairy brand.