UN Unilever NV

By Anne Steele 

Kraft Heinz Co. said Friday it has made a bid to merge with U.K consumer products giant Unilever PLC, a move that would bring together some of the best-known consumer-facing brands in the world.

Kraft Heinz said Unilever has declined the proposal, but that "we look forward to working to reach agreement on the terms of a transaction."

The U.S.-based food and beverage maker said it is uncertain that any further formal proposal will be made to Unilever or that an offer will be made at all. It also said the terms of any such transaction are uncertain.

Representatives for Unilever didn't immediately respond to requests for comment.

Shares of Unilever rose more than 14% in London trading, giving the company a market value of GBP109.8 billion, or $136.4 billion, according to FactSet. Shares of Kraft Heinz rose 5.6% to $92.19 in premarket New York trading; at that level, it has a market value of about $112 billion.

A deal would mark the latest wave of consolidation among consumer-goods giants after Heinz in 2015 merged with Kraft in a deal orchestrated by Warren Buffett and Brazilian private-equity firm 3G Capital Partners L.P., creating one of the world's largest food-and-beverage companies. 3G, an acquisitive Brazilian firm, is known for buying consumer companies it considers bloated and aggressively slashing costs.

A union would bring together brands like Kraft Heinz's namesakes as well as Oscar Mayer hot dogs, Planters peanuts, Philadelphia cream cheese and Maxwell House coffee with Unilever's Dove soaps, Axe body sprays, Hellman's mayonnaise, Lipton teas and Ben & Jerry's ice cream. Unilever has increasingly been pushing into higher-end personal care, making a series of acquisitions like its 2016 deal to buy Dollar Shave club for $1 billion.

Consumer-goods firms are struggling with a host of headwinds they have little control over: fluctuating exchange rates, rising commodity prices that often feed into packaging or ingredient costs and tepid global economic growth that has weighed on sales. All that has sharpened the focus on the few things executives can still influence: costs and nimbleness in meeting fast-changing consumer tastes.

At Unilever, the world's second-largest consumer-goods firm by sales after Procter & Gamble Co., sales growth slowed last year, spooking investors and underscoring the cost-cutting pressure that consumer-goods companies face as they struggle to sell more of their staples, from soap to packaged food, around the world.

Kraft Heinz, meanwhile, has struggled with sales declines in the U.S. and Europe, where consumers are buying food they view as fresher and more natural. The company has responded by removing artificial colors from foods like Kraft's famous blue-box mac-and-cheese, and creating a new brand of frozen meals aimed at using trendier ingredients to attract younger consumers.

--Saabira Chaudhuri contributed to this article.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

February 17, 2017 08:13 ET (13:13 GMT)

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