Tag Archives: Consumer Goods

Unilever buys Brazilian brand of natural foods

Unilever announced this Monday (2) the acquisition of Brazilian brand Mãe Terra. The company specializes in natural and organic produce and was established in 1979. The acquisition cost was not disclosed. 

Mãe Terra, which produces organig cereals, cookies and other snacks, has been growing 30 YoY and its acquisition is an attempt from the global giant to become relevant in the organic market in Brazil. 

The acquisition is still pending standard  regulatory approvals

Kraft Heinz Offers a Merger with Unilever for $143 billion: Rejected for now

Unilever has rejected a $143 billion merger proposal from Kraft Heinz, the Brazilian-controlled food conglomerate 3G Capital and mega-dealer Warren Buffett, setting the stage for a battle between two of the world’s largest consumer products companies.The Anglo-Dutch company, behind big brands like the Dove soap and the Ben & Jerry ice cream, said the offer of $ 50 per share and new papers – an 18% premium on the closing price on Thursday (16) – “fundamentally undervalues ​​Unilever”.

“Unilever has rejected the proposal because it sees no merit, financial or strategic, for its shareholders. Unilever sees no basis for further discussions,” the statement said.

Kraft Heinz’s approach comes at a sensitive time for the UK, with its politicians and big companies trying to maneuver through the uncertainty generated by the country’s exit from the European Union. The decision to leave the world’s largest trading block caused a fall in pound sterling’s value, which made UK assets significantly cheaper and attractive to the attack by wealthy non-British investors.

Unilever has a complex shareholding structure, with papers listed on the London and Amsterdam stock exchanges.

Kraft Heinz said it had made “a comprehensive proposal for Unilever on combining the two groups to create a leading consumer products company with a mission of long-term growth and sustainable living.”

“Although Unilever has declined the proposal, the company is eager to work out an agreement on the terms of a transaction. There can be no certainty that any other formal proposal will be made to the Unilever board.”

Unilever said Kraft Heinz’s offer consisted of an existing Unilever payout of $ 30.23 in cash and a further 0.222 share of the company resulting from the merger.

Shares of Unilever rose 12.5 percent to 37.59 pounds on Friday, giving the company a market capitalization of 113 billion pounds, which means that any acquisition would be one of the largest in history. Its US-listed stocks rose 10.6% to $ 47.08 in pre-opening trading. It is the fourth largest company in the world of consumer products by sales, with revenue last year of 52.7 billion euros.

Under UK rules on takeovers, Kraft Heinz has until markets close on March 17 to make a firm bid or refrain from making a new bid for Unilever for six months.

This merger would unite some of the top brands in the global consumer industry, adding Dove and Knorr to Kraft Heinz’s list of Philadelphia cream cheese, Heinz ketchup and Weight Watchers.

News of the offer comes a day after Kraft Heinz shares fell nearly 5 percent, the biggest daily drop since the big merger that shaped the company in 2015. The company reported a 3.7 percent drop in quarterly sales Quarter and said it intended to step up cost cutting

Like many other consumer products companies, Unilever has been seeing slowing growth as consumers are not loyal to brands in mature markets and are increasingly turning to start-ups for new products.

Emerging markets account for 58% of Unilever’s sales, more than the industry average, and the company relies heavily on them to grow.

Kraft Heinz was formed in a $ 100 billion deal orchestrated by Buffett and 3G Capital in 2015 and has focused on aggressively reducing costs in the companies it has purchased, with the goal of saving $ 1.7 billion annually by 2018.

Analysts expect further consolidation in the industry and speculate that 3G could strike again, two years after its last big business. Some point to Mondelez International as a possible target.

In January, Unilever chief executive Paul Polman shocked investors by warning of “challenging” conditions in the first half of this year, after a slow 2016.

Unilever reported a 3% increase in pre-tax profit in 2016 to 7.5 billion euros, driven by a reduction in costs and an increase in efficiency that raised basic operating margins by 50 basis points to 15.3% .

Polman warned on the occasion that “difficult market conditions” would only ease in the second half of this year. “We expect a slow start, with improvement as the year progresses,” he said.

The immediate cause of poor performance in the last three months of last year came from India and Brazil: Unilever’s second and third largest markets, respectively, representing 14% of the group’s revenues.

Heineken Acquires Schincariol’s Owner, Brasil Kirin, for 664 Million Euros

The Dutch multinational Heineken announced on Monday (13) the purchase of Brazil Kirin, controlled by the Japanese group Kirin, for 664 million euros (R$ 2.2 billion). With the acquisition, Heineken becomes the second largest brewery in Brazil. After the conclusion of the deal, Brasil Kirin will be consolidated with Heineken.The transaction evaluates Brazil Kirin at 1.025 billion euros (R $ 3.3 billion), including debt. Brazil Kirin closed 2016 with a revenue of R $ 3.706 billion, against a revenue of R $ 3.698 billion a year earlier, and an operating loss of R $ 262 million, against R $ 322 million in 2015.

Kirin Brazil has 12 factories and its own distribution network. The company has a particularly strong presence in the North and Northeast, where Heineken has less exposure. The beer portfolio, which includes brands such as Schin, Devassa, Baden Baden and Eisenbahn, has a market share of 9.9%. Brazil Kirin also has a line of soft drinks, with a market share of 2% in the category.

Heineken operates five plants in Brazil and distribution is done by Coca-Cola bottlers. The company said it expects significant cost synergies with the acquisition, with efficiency gains in production, logistics optimization and sales, general and administrative expenses.

Completion of the purchase is subject to the approval of the Administrative Council for Economic Defense (Cade).

Ambev: Great Long-Term Investment. Cheers!

Ask any Brazilian what is their favorite beer and you are likely to get one of these three answers: Skol, Brahma or Antarctica. Since we are talking about Ambev in this post, you must be guessing Ambev owns Skol, which is the dominant beer brand in Brazil. That’s partly right. Ambev does own Skol. But Ambev also owns Brahma and Antarctica. That’s right: they own all three dominant beer brands in Brazil. Together, these three brands have around 70% of the market share in Brazil. On top of that, the brand preference by the consumers’ taste gives Ambev a good pricing power and they have been able to smoothly pass cost increases to the consumers and to keep margins up.

Ambev also owns Premium brands like Antarctica Original and Bohemia. Premium beer has a good growing outlook in Brazil and Latin America over the next decades due to the growing countries’ middle-class.

Ambev is present in 14 countries in the Americas and they lead in 6 of the countries where they operate: Brazil, Argentina, Canada, Paraguay, Uruguay and Bolivia.

They also distribute Pepsi and Quilmes in most countries in South America, Budweiser in Canada and Brazil and Stella Artois in South America and Canada.

Easy Brazil Investing Rating

Ambev’s competitive advantage is built on its brands, distribution network and scale. All these factors along with the exposure to fast-growing markets, grant Ambev the highest EBI Rating: 5 stars.

Ambev – Companhia de Bebidas das Américas

ADR Ticker ABV, ABVC
Investor Relations Website http://ir.ambev.com.br/default_en.asp?idioma=1&conta=44
Industry* Brewers
Bovespa Ticker AMBV3, AMBV4
EBI Rating 5 Stars