Dealmaker Michael Klein helped kill Kraft Heinz bid for Unilever
Financier called Warren Buffett to explain political hurdles
Warren Buffett was persuaded to drop Kraft Heinz’s $143bn takeover approach for Unilever by the corporate financier Michael Klein, making the dealmaker the unlikely executioner of what would have been the second-largest merger in corporate history.
Earlier this month, Kraft Heinz, which is backed by Mr Buffett and Brazil’s 3G, revealed that it was seeking to acquire the Anglo-Dutch company behind brands such as Dove soap and Ben & Jerry’s ice cream.
Two days after the proposal became public on Friday February 17, Mr Buffett, the billionaire head of Berkshire Hathaway, awoke to a letter from Paul Polman, Unilever chief executive, explaining his hostility to the deal.
Mr Klein, a former Citigroup executive who has worked alongside Tony Blair, former British prime minister, on some deals, then telephoned Mr Buffett to explain political sensitivities around the deal, according to people briefed on the discussion.
In the UK, Theresa May’s Conservative government has been pushing for stronger industrial policy that safeguarded jobs, and MPs had already voiced opposition to the deal. In the Netherlands, home of half of Unilever, parliamentary elections are scheduled for March 15.
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Mr Klein then put Mr Buffett on the line with Mr Polman. Within hours, Kraft Heinz had pulled its bid.
Mr Klein is better known as a consummate dealmaker. He helped to organise peace talks between Ivan Glasenberg, Glencore chief, and Mick Davis, Xstrata chief, which paved the way for an $90bn merger of the two commodities groups in 2013.
Representatives at M Klein & Company, Mr Klein’s advisory group, could not be reached for comment.
The failure of the Kraft Heinz approach for Unilever is a rare stumble for Mr Buffett and his partners at 3G.
The latter is known for adopting aggressive cost-cutting tactics that are upending the consumer goods industry. They have taken stakes in the beverages group Anheuser-Busch InBev and Restaurant Brands International, the owner of the Burger King and Tim Hortons restaurant chains.
Last week, Unilever said the aborted bid had been a “trigger” for it to work harder and faster on delivering better returns to investors. It has launched a review of its business to be concluded by early April.
This article has been amended to clarify the relationship between Tony Blair and Michael Klein. They worked together on deals rather than founding a firm.