Unilever has upgraded profit margin expectations and announced a “comprehensive review of options” to improve value for shareholders in an apparent effort to shore itself up against a renewed bid from the US food group Kraft Heinz.
The Anglo-Dutch company knocked back a £115bn bid from Kraft on Friday, and 48 hours later its US rival withdrew its bid, with both sides saying talks had ended “amicably”.
Kraft is now blocked from renewing its interest for six months under the UK’s takeover code, while Unilever has expressed confidence in the support it has from long-term investors.
But management, led by the chief executive, Paul Polman, is thought to have been surprised that Unilever could be seen as an acquisition target and released two statements outlining plans to ensure shareholders wouldn’t be tempted by further takeover bids.
In a statement to the stock market, the company said it was “conducting a comprehensive review of options available to accelerate delivery of value for the benefit of our shareholders”.
“The events of the last week have highlighted the need to capture more quickly the value we see in Unilever. We expect the review to be completed by early April, after which we will communicate further.”
The announcement is likely to revive suggestions that Unilever could look to sell its struggling standalone spreads business.
The company could also examine ways to boost the company’s share price by stepping up efforts to squeeze costs, a strategy that would make a renewed tilt by Kraft Heinz more expensive if successful.
Unilever issued a second statement saying its forecast profit margins were already improving after it moved to cut costs last year.
“The management of Unilever now expects core operating margin improvement for 2017 to be at the upper end of its 40-80 basis points guidance,” the company said.
Shares in the company climbed 3% following the statement, having soared 13% to a record high when Kraft’s interest was revealed on Friday and fallen back 8% on Monday.
Unilever’s decision to take action immediately after becoming a bid target suggests management believes Kraft could renew its interest after its billionaire backers tasted a rare defeat.
Warren Buffett’s investment group Berkshire Hathaway and buyout house 3G, backed by the Brazilian billionaire Jorge Lemann, own 51% of Kraft Heinz between them.
The duo are famed for their deal-making prowess, founded on a strategy of driving profits by slashing costs.