Change in control likely at HUL if Unilever-Kraft Heinz deal happens: CLSA
MUMBAI: CLSA said that a merger between Unilever and Kraft Heinz would lead to change of control at Hindustan Unilever, which would trigger an open offer.
Dutch British consumer products giant rejected a $143-billion bid merger bid by Kraft Heinz on Friday but the latter has indicated that it will look forward to reaching an agreement on the terms of the transaction, indicating that it will continue to pursue the deal, reports suggest.
The brokerage said there is no certainty that any further formal proposal will be made to Unilever or that an offer will be made at all or as to the terms of any transaction.
"In the event of an eventual deal at a global level, we see a change in control for Hindustan Unilever, which would trigger an open offer to acquire a 26% stake - although, eventual shareholding cannot exceed 75% after a specified timeline," said CLSA in a note to clients.
The transaction could also provide an opportunity to the eventual parent to delist the entity under a composite deal, it added.
Currently, CLSA has a buy rating on Hindustan Unilever with a target price of Rs 980.
Shares of Hindustan Unilever ended down 0.5% at Rs 842.35 on Friday. Promoters held 67.2% in the company as of December, data on BSE's website showed. Foreign Portfolio Investors held 13.1% stake, mutual funds owned 1.8% and Life Insurance Corporation of India held 1.5% stake in Hindustan Unilever.
Dutch British consumer products giant rejected a $143-billion bid merger bid by Kraft Heinz on Friday but the latter has indicated that it will look forward to reaching an agreement on the terms of the transaction, indicating that it will continue to pursue the deal, reports suggest.
The brokerage said there is no certainty that any further formal proposal will be made to Unilever or that an offer will be made at all or as to the terms of any transaction.
"In the event of an eventual deal at a global level, we see a change in control for Hindustan Unilever, which would trigger an open offer to acquire a 26% stake - although, eventual shareholding cannot exceed 75% after a specified timeline," said CLSA in a note to clients.
The transaction could also provide an opportunity to the eventual parent to delist the entity under a composite deal, it added.
Currently, CLSA has a buy rating on Hindustan Unilever with a target price of Rs 980.
Shares of Hindustan Unilever ended down 0.5% at Rs 842.35 on Friday. Promoters held 67.2% in the company as of December, data on BSE's website showed. Foreign Portfolio Investors held 13.1% stake, mutual funds owned 1.8% and Life Insurance Corporation of India held 1.5% stake in Hindustan Unilever.
