Henkel in the sights of Unilever / private equity

€84 the current share price on Henkel PFD (preference shares). It has been over €115 over the past year– still paying a good dividend. €35bn market cap.

Unilever is looking at the Persil, Right Guard, Pritt owning group, as well as private equity. Henkel is in focus as it has a number of divisions, and with the bombed out share price and multiple brands, it could subsequently be cherry picked by its new owners. Given where the shares are now an offer around €120 a share would be difficult to resist.

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The 143 year old business clearly needs a revamp, despite being one of the oldest German names in consumer products. This would almost certain include focusing the company on a core business, rather than the current all things to all people offering. Indeed, it is the type of opportunity that the late Sir James Goldsmith would probably have liked the look of in terms of a bid to break up the company in asset stripping fashion.

Given the dearth of M&A in the markets due to political and regulatory overkill, this could be just the type of deal to get the City of London moving again. It would also be a good way of Unilever proving that saying no to Kraft Heinz was not a foolish mistake – which it was.

The only issue here is whether private equity would steal its thunder and make a move  on Henkel first, before selling the parts back to the likes of Unilever or Reckitt Benckiser?

Author: Zak Mir

Financial commentator, interviewer, technical analyst

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