Unilever shares soared this morning after food conglomerate Kraft-Heinz, backed by Warren Buffett and Brazil's 3G, confirmed it made a £112bn takeover offer for Unilever, leading to a 11% surge in the shares of the London-listed Anglo-Dutch conglomerate, the biggest one day surge since 1987. Shares of Kraft Heinz rose over 4% premarket in New York.
In a statement issued shortly after the FT reported earlier on Friday that Kraft Heinz had made an approach to Unilever, Kraft said that Unilever declined its initial offer, but added "while Unilever has declined the proposal, we look forward to working to reach agreement on the terms of a transaction."
The U.S. food and beverage maker said it is uncertain that any further formal proposal will be made to Unilever or that an offer will be made at all. It also said the terms of any such transaction are uncertain.
With Unilever's market capitalization of £112bn, a potential takeover would be one of the largest in history. The company is the world’s fourth-largest consumer goods company by sales, with revenues last year of €52.7 billion. As the FT adds, "a deal would unite some of the biggest brands in the global consumer good industry, adding the likes of Dove and Knorr to the Kraft Heinz roster, which spans Philadelphia cream cheese, ketchup and Weight Watchers."
Following the news, Mondelez dropped 5.2% pre-market, Kellogg -2% and General Mills -0.9%, as a potential deal has dampened speculation that other packaged food companies could be targets for KHC.
In the statement just filed by Unilever, in which it recommends holders take no action, it announced that Kraft-Heinz had offered $50/share for the company.
As the takeover was first reported by the FT Alphaville blog, there was immediate speculation how widely it was leaked first. Sure enough, volume of bullish Unilever options rallied in the past two days. As Bloomberg points out, on Unilever’s U.S. ticker, 10,909 calls traded on Feb. 15, the most since 2011 and compared with 232 puts; 5,186 bullish contracts changed hands on Feb. 16 versus 31 bearish bets. March $45 and $40 calls were the most active on Feb. 15; March and May $45 calls were the most traded on Feb. 16. On the Dutch ticker, call volume jumped to 24,649 on Feb. 16, the most since September and more than double put trades. March EU40 calls were the most traded on Feb. 16.
The SEC will be busy tracking down just who leaked what.