(Corrects location of conference from New York to Florida)
Feb 24 Kraft Heinz's bid has jolted
Unilever into focusing more on delivering on its
strategy in the short-term, the Anglo-Dutch company's finance
chief said on Friday.
Graeme Pitkethly said Kraft's offer had highlighted the
importance of achieving a balance between long-term sustainable
value, which it had prioritised, and short-term delivery.
"This has certainly been a trigger moment for Unilever, and
we will not waste it," he said at the Consumer Analyst Group of
New York conference in Boca Raton, Florida, in a presentation
streamed on its website.
The U.S. company walked away from a fight with Unilever on
Sunday, just two days after its $143 billion bid - and
Unilever's rejection - was made public.
Kraft, which is backed by Warren Buffett and the private
equity firm 3G, wanted to buy Unilever as part of its strategy
to become a leading consumer goods giant by buying competitors
and cutting costs and jobs to drive profits.
The approach caused Unilever to announce a far-reaching
review on Wednesday, seeking to show shareholders it could
realise the value spotted by its rival.
Pitkethly said he believed Unilever could do more to
communicate the value buried within its existing plans, while
the review would look at options for the group's portfolio,
organisation, cost structures, balance sheet and use of cash.
He said Kraft had taken advantage of a recent widening gap
between Unilever's share price and the sector average, caused in
part by a weak outlook for markets like India and Brazil.
"The combination of being at the bottom of the emerging
market cycle combined with a lack of volume growth in the fourth
quarter led to a very weak Unilever share price," he said.
"Add to this that we were at the bottom of credit cycle and
our own strong balance sheet, and you have the opportunity for a
Pitkethly said the bid "substantially undervalued" Unilever,
while Kraft's approach to shareholder value was diametrically
opposed to its own.
While Unilever had an "inherently sustainable" model of
looking to grow by compounding returns and investment over the
long term, Kraft, he said, relied on leverage to generate
stronger short-term growth and earnings.
But without the foundation of strong organic growth, Kraft
would be dependent on further deals.
"It may be there was a strong strategic rational for Kraft
in combining with Unilever, but there was no strategic rationale
for Unilever," he said.
(Reporting by Paul Sandle in London and Siddharth Cavale in
Bangaluru; Editing by Kate Holton and Alexander Smith)