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Friends and friction: Corporate raiders are a merciless bunch

Feb 26 2017 06:16
Muzi Kuzwayo

Once they set their sights on you, you have little chance of escape.

There is nothing like them in nature, but try to imagine a vulture with the stamina of a wild dog, the viciousness of a hyena — which doesn’t even wait for its prey to die to start biting off chunks of flesh – and then add the strength of the king of beasts.

Corporate raiders are just as merciless.

At the moment, Unilever is like a cat on a hot tin roof — jumping around and hoping for survival. “The events of the last week have highlighted the need to capture more quickly the value we see in Unilever,” the company said in a statement, after Kraft tried to take it over.

The opportunity came through the door left open by Brexit: the British pound lost its strength, and then, suddenly, Unilever, with its turnover of over 50 billion (R685 billion) and over 400 brands – including soaps and ice cream – seemed digestible.

This is particularly important to South Africans because we don’t know how new owners of Unilever would reduce the number of brands.

If Sunlight green soap were to go, it has the potential to wipe out an important part of our culture. What do you think would happen to the spyt, ukuchatha or flushing the colon? Think of izangoma and the prophets who will lose all that business.

Killing Rama margarine could cause a national revolution.

Warren Buffett has joined forces with a Brazilian corporate raider Jorge Lemann to form a deadly duo. They first met when they both sat on the board of Gillette.

In the English-speaking world, Lemann may not be as famous as his partner, but he has shaken global business.

An unconventional billionaire, he is a five-time national tennis champion of Brazil and has even played at Wimbledon.

He quit tennis when he realised that he would never make it as one of the top 10 players in the world.

Lemann, the founder of 3G capital, is a real strategist — a true plotter, cunning, yet classy, as Buffett described him.

He bought controlling stakes in two Brazilian breweries, and then merged them to form AmBev, basically taking control of the beer market in South America.

He then invaded the European market, merging with Interbrew in a deal valued at more than $11 billion (R142 billion).

InBev was born, and toppled Anheuser-Busch as the largest brewer in the world.

It was time to invade North America, and $52 billion bought Lemann control of his US rival, Anheuser-Busch, and AB InBev was formed.

There was stiff resistance, including from former US president Barack Obama, albeit before he took office.

Only London and Johannesburg were left, and for $100 billion, he captured SABMiller and took control of over 30% of the world beer market.

But wait, there’s more, as the commercials say. He and Warren Buffett also control Kool-Aid, through Kraft Heinz, and in 2009 they put up a hostile bid to take over Cadbury, which they won.

Now they’re after Unilever, and their opening bid is $143 billion.

“Costs are like fingernails. You have to cut them constantly,” is what seems to be the mantra at 3G.

After taking over Heinz, the company fired 600 people at head office and 9% of its north American workforce.

At Cadbury, they shut down the Somerdale chocolate factory and fired 400 workers.

After the SABMiller takeover, the new bosses said they planned to save $1.4 billion per year.

The jury is still out on a comfort break, but it cannot go against the tenet of capitalism that some will make money, and others will lose it.

UK Prime Minister Theresa May is suspected to be on the side of Unilever, but these guys have taken on greater politicians before, and won.

Kuzwayo is the founder of Ignitive, an advertising agency

unilever
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