FTSE Flat as Unilever Slips by 7%

The FTSE 100 slipped by 0.1 points, down to 7,299.86 yesterday after a quiet session. The biggest news of the day was the fallout from Unilever rebuffing Kraft Heinz’s takeover bid.

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shareprices.com - Tuesday, February 21, 2017

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Wall Street was closed for President’s Day, but the German DAX put in a strong performance, gaining 70.6 points, while the French CAC 40 slipped by 2.6 points. Brent Crude was $56.15 a barrel, and the pound rebounded up to $1.25.

It is not uncommon for days without US traders to be quiet on the European front. Friday’s bounce in risk assets saw no follow through in Europe, and the main focus of the day was the decline in Unilever shares, with Kraft stepping back from their proposed bid.

M&A seems to be the main driver in the consumer staples sector, and Kraft’s move is likely to cause a number of other companies to start looking at their own merger plans.

While shares in Unilever are down on the day, they remain above their pre-bid levels. The hostile reaction to the takeover bid from both British politicians and Unilever themselves has sent Kraft Heinz packing. It’s possible that the government would have waved it through, since they allowed the ARM bid to take place, but Kraft were unprepared for the backlash and were not willing to take such a risk. The response from investors suggests that they believe that there is still some hope for a modified deal which would see Kraft take over a part of the business.

 

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