Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • May 2017 (Revised February 2024)
  • Case
  • HBS Case Collection

Battle for the Soul of Capitalism: Unilever and the Kraft Heinz Takeover Bid (A)

By: William W. George and Amram Migdal
  • Format:Print
  • | Language:English
  • | Pages:17
ShareBar

Abstract

This case describes Kraft Heinz Company’s (KHC) February 2017 unsolicited $143 billion takeover offer to acquire Unilever. The offer was made to Unilever CEO Paul Polman by KHC chairman Alexandre Behring, who was also co-founder and CEO of Brazilian-based 3G Capital (3G). Since being acquired by 3G in 2013, KHC profit margins had increased by more than half, to 28%, well above food industry averages, as its share price rose 24%. The case examines the divergent approaches to value creation embraced by 3G and Unilever, respectively. 3G had a well-earned reputation for immediate return to shareholders by cutting costs in its acquired companies, creating rapid increases in earnings and cash flow. Under the leadership of co-founder Jorge Paulo Lemann, 3G had teamed with Warren Buffet’s Berkshire Hathaway in recent years on the acquisitions of Burger King, which then bought Tim Horton’s in Canada, and H.J. Heinz, which subsequently acquired Kraft Foods. Under Polman’s leadership, Unilever focused on long-term shareholder value accretion with a multi-stakeholder approach that emphasized global growth in revenues and earnings through deep penetration in rapidly growing emerging markets and creation of competitive advantage through sustainability. In Polman’s eight years at the helm, Unilever had delivered a 190% return to its shareholders. The case presents Polman’s dilemma: a takeover of Unilever by KHC/3G could erode the company’s commitment to sustainability and a multi-stakeholder model, and the 18% premium of KHC/3G’s offer undervalued Unilever and its long-term value creation strategy. However, 3G’s emphasis on efficiency could enhance Unilever’s profitability, and Polman was obliged to give serious consideration to the KHC offer and whether it would drive near-term value creation for Unilever shareholders.

Keywords

Acquisition; Value Creation; Decision Choices and Conditions

Citation

George, William W., and Amram Migdal. "Battle for the Soul of Capitalism: Unilever and the Kraft Heinz Takeover Bid (A)." Harvard Business School Case 317-127, May 2017. (Revised February 2024.)
  • Educators
  • Purchase

Related Work

    • May 2017
    • Faculty Research

    Battle for the Soul of Capitalism: Unilever and the Kraft Heinz Takeover Bid (B)

    By: William W. George and Amram Migdal
    • May 2017 (Revised February 2024)
    • Faculty Research

    Battle for the Soul of Capitalism: Unilever and the Kraft Heinz Takeover Bid (A)

    By: William W. George and Amram Migdal
Related Work
  • Battle for the Soul of Capitalism: Unilever and the Kraft Heinz Takeover Bid (B) By: William W. George and Amram Migdal
  • Battle for the Soul of Capitalism: Unilever and the Kraft Heinz Takeover Bid (A) By: William W. George and Amram Migdal
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College.