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Kraft Heinz' failed bid for Unilever

21 February 2017 News
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Late last week, Kraft Heinz (KH) bid $143 billion for Unilever on the heels of an earnings call where KH told investors that additional savings through cost cuts were limited. The bid ultimately failed. So how is KH to boost profitability given its business model and with few additional available cost cuts? History has shown that in this case KH/3G will acquire another company repeating the process all over again.

A recent WSJ article however notes, "Kraft Heinz said buying rivals isn't the only way for it to produce strong returns. Chief Financial Officer Paulo Basilio, also a partner at 3G, said Wednesday that the company has decided to make additional investments in marketing, improving food quality and developing new products to boost sales."

Product investment would be a positive in an industry challenged by changing consumer demand and would help KH grow its business in a more sustainable and less debt dependent way. Investments in the workforce would also be advantageous driving productivity and improved morale amongst those who have help build Kraft Heinz and its predecessor companies-Kraft Heinz' workforce.

We suggest IUF affiliates ask KH management about their future investment plans and report any findings to the IUF Secretariat.