CEO's warning to Heinz over takeover

Heinz is attempting a takeover of British marmite maker Unilever. Photo / 123rf

The boss of Sainsbury's said he expects competition authorities to have a "field day" after it emerged on Friday that the US owner of Heinz was trying to buy consumer goods giant Unilever.

Unilever's shares rocketed 13 per cent, valuing it at £108 billion (NZ$187b), after news broke of an approach from Kraft Heinz.

Any deal would be one of the world's biggest ever takeovers and would result in a business with annual sales of more than £60 billion.

Kraft Heinz is majority owned by Berkshire Hathaway - the conglomerate headed by legendary investor Warren Buffett - and investment group 3G Capital, which are believed to be strong supporters of the takeover bid.

Sainsbury's chief executive, Mike Coupe, said of the bid: "Unilever is our biggest supplier.
Given that Heinz is also a fairly big supplier, I would imagine the competition authorities would have a lot to say about it and that would be the case in every country they both trade in."

"Supermarkets are portrayed as having a disproportionate amount of power in supplier relationships, but [critics] sometimes miss the point that Unilever, Procter & Gamble, Nestlé and Coca-Cola are massive monoliths many times our size and making massive profits."

The group would have larger sales than Tesco and more than twice those of Sainsbury's.

He added: "It's huge - a reflection of the way the world is changing. It's likely to be long and drawn out, simply because the competition authorities will have a field day."

Unilever said the offer of about £40 a share "fundamentally undervalues" its business and that it "does not see the basis for any further discussions".

Chicago-based Kraft Heinz admitted there was no certainty of a deal but implied it would pursue the plan.