A Kraft-Heinz Unilever Merger May Still Happen

The world’s oceans are not measured by their economic value, but some economists say they should be. If the oceans were considered a country, they would be the seventh largest economy in the world. Economist put a dollar value on the oceans two years ago, and they came up with a $24 trillion as the value they generate from shipping, fishing, tourism, renewable energy, and oil, and gas. The oceans deliver $500 billion in dividends to humanity every year, according to Professor Ove Hoegh-Guldberg, director of the Global Change Institute. That fact is rarely mentioned. The value of the oceans is completely ignored by many countries. Marine resources are being degraded by pollution, plastic waste, and climate change. But even with the amount of pollution the oceans still perform a valuable service that impacts the bottom lines of hundreds, if not thousands, of corporations every year.

A good example of how oceans play in the global scheme of economic negotiating is the proposed merger between Kraft-Heinz and the U.K.’s mega-consumer driven giant, Unilever. The $143 billion merger would be the third largest corporate deal in history. But Unilever is not impressed by Kraft’s offer. Unilever thinks Kraft-Heinz would be getting some very recognizable brands on the cheap. Kraft-Heinz is not giving up, however. Both companies are facing challenges in the ever-changing consumer market. More consumers on both sides of the ocean are giving up on the products that don’t fit into the all-natural category. Kraft-Heinz has Oscar Meyer meats, Philadelphia cheese spreads, and Maxwell House coffee as their lead products and Unilever has Dove soap, Best Foods/Hellman’s mayonnaise, and Lipton tea in their product assortment.

The mega-consumer product deal has some heavyweight investors pushing for closure. Brazilian investment firm 3G Capital, and billionaire investor Warren Buffett’s Berkshire Hathaway own 51% of Kraft-Heinz. Buffett is the catalyst behind the Kraft-Heinz proposal, according to James Dondero, the CEO of Highland Capital Management. Dondero thinks Kraft-Heinz won’t stop until a deal is done. The only stumbling block is the price, according to Dondero. Unilever thinks they are worth more than a $143 billion.

Even though the deal is still up in the air, shares of Kraft-Heinz rose 10.7 percent recently. Unilever stock hit $44.90 a share, and that is a $5.42 jump. Both companies are worth more than $100 billion, according to Dondero. Dondero thinks Unilever is actually worth more than Kraft-Heinz.

The merger between these two giants shows the importance of the oceans in the economic growth of the world. A merger between two companies like these two would not have taken place without the value oceans provide in terms of shipping, and other logistic issues. The distance between the two corporate headquarters is divided by an ocean, but they are also economically connected by the same ocean.

Jim Dondero is the president and CEO of Highland Capital Management. Dallas-Based Highland Capital Management has more than $16 billion in assets under management. Dondero is an expert in emerging market investing and asset allocation management. He earned his accounting and finance degrees from the University of Virginia. He is the Chairman of NexPoint, NexBank, Cornerstone Healthcare. He also sits on the board of MGM Studios. Jim is responsible for supporting several high-profile nonprofit organizations in the Dallas area through the Highland Dallas Foundation. He supports clean ocean initiatives and several other environmental organizations.


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