Unilever plunges after Kraft Heinz abandons takeover bid; eurozone agrees to restart talks with Greece on bailout reforms

There is no short-term fix for education publisher Pearson as it grapples with serious structural and cyclical issues in its higher education courseware division. That was the message from Berenberg, as it cut the FTSE 100 stock’s price target to 400p from 500p and reiterated its “sell” rating.

Ahead of full-year results, due for release on Friday, the broker warned Pearson is unlikely to return any cash to shareholders. It also does not see further opportunities for major savings, highlighting that the company has  already spent £610m on two restructurings in the last five years.

Analysts also see no potential to sell “a cleaned up” Pearson to a competitor and think private equity will steer clear.

As for the possibility of a breakup, if Pearson sold its attractive assets, such as Connections Education and Embanet, it would be even more reliant on the declining higher education asset.  Analyst Sarah Simon said: “This is not a case of cutting off a diseased limb: it is a deceased body”.

Shares  dropped 26p, or 3.9pc, to 642.5p.

Meanwhile, the FTSE 100 hit a new one-month high of 7,329.56. in intraday trade. However, a slump in Unilever weighed on the broader market, leaving the blue chip index unchanged at the closing bell at 7,299.86.

Kraft Heinz abandoned its £115bn takeover bid for Unilever on Sunday, causing shares to nose-dive 249p to £35.48, yesterday.

Private hospital group Mediclinic lost 26p to 802p, on the back of a ratings downgrade by Jefferies, while Standard Chartered lost 8p to 765p after JP Morgan cut its rating to “neutral” as it believes the bank’s recovery under will “take time to deliver”.

On the other side, Royal Bank of Scotland rallied 16.5p, or 6.8pc, to 258.9p, after it abandoned the planned sale of its Williams & Glyn unit.

Elsewhere, Goldman Sachs hiked Rolls-Royce’s rating to “buy” and added it to its “conviction list” sending shares 42p higher to 708p.

Alton Towers owner Merlin Entertainment also made gains, up 11.7p to 501.5p, after Barclays increased its price target by 11pc to 575p as it believes 2017 could be “a very strong year” for the group.

The house building sector came under pressure after mid-cap Bovis Homes tumbled 86p to 755p following a slump in full-year profits. It also expects building volumes to fall by around 10-15pc this year. Barratt Developments fell 6p to 514.5p, Taylor Wimpey slipped 1.9p to 175.6p and Berkeley shed 66p to £28.72.

Tullow Oil jumped 3.7pc, to 269p, on a rating upgrade, while President Energy rose 1.9pc to 6.5p after operations commenced on the first well of its fully funded workover programme in Argentina.

With that, it's closing time. I'll be back again tomorrow from 8.30am with more markets coverage. 

The next disbursement of financial aid to Greece from its euro zone lenders may not be imminent as talks are still complicated, the head of euro zone finance ministers said this afternoon, adding that the target was to secure a deal as soon as possible.

"There is still a lot of work to do," Jeroen Dijsselbloem told a news conference after a meeting of finance ministers in Brussels.

"I want to temper expectations. There is no need for a disbursement in March, April or May," he said. Greece will need new funds to pay its debt by July.

Dijsselbloem added that he hoped that a deal on Greek reforms and on the next disbursement can be reached "as soon as possible", but declined to answer a question on whether the next loan will hinge on the participation of the International Monetary Fund to the bailout.

This is a condition imposed by Germany, although the IMF has not yet decided on its role in the Greek bailout.

Quotes from Reuters

Stepping away from the Eurogroup meeting, it's worth noting European bourses have closed higher today, buoyed by a bounce in banks and telecoms stocks. 

At the closing bell: 

• FTSE 100: unchanged
• DAX: +0.66pc
• CAC 40: +0.05pc
• IBEX: -0.24pc

Euro zone finance ministers decided this afternoon to send experts back to Athens to negotiate a deal with Greek authorities on the tax, labour and pension reforms needed to disburse new funds under the country's bailout, the head of the Eurogroup said.

Creditors' representatives, including the International Monetary Fund, will go back to the Greek capital to discuss an "additional package of structural reforms," Jeroen Dijsselbloem told a news conference after a regular monthly meeting of euro zone ministers in Brussels.

He said a deal will be necessary on tax, pensions and labour market regulations.

He added that "there will be a change in the policy mix, moving perhaps away from austerity and putting more emphasis on reform.

Quotes from Reuters

Here's the full report on what has happened this afternoon from Reuters: 

 Euro zone finance ministers and Greece agreed on Monday to resume negotiations over its bailout review next week, and to be concluded swiftly afterwards, a Greek government official said.

"The agreement includes the inviolable condition that was set by the Greek side for not even one euro more of austerity," the government official said.

Greece accepted to legislate reforms which would be adopted from Jan. 1, 2019 onwards, on condition that the fiscal impact would be neutral, the official said.

Talks over Greece's bailout had stalled over delays in reforms by Athens, and disagreements among lenders themselves on whether the International Monetary Fund would participate in the bailout, brokered in mid-2015 and worth up to 86 billion euros.

A eurozone finance minister in discussions in Brussels told Reuters: "There was no substantial discussion but an agreement for the Institutions to return. Good news under the circumstances."

The Greek official did not refer to the possibility of the IMF being part of the bailout.

The official said technocrats representing the lenders would return to Athens immediately after Feb. 27 with a view to 'concluding a staff level agreement within a few days'.

Slovakia's Finance Minister Peter Kažimír confirms the "good news". Mission experts will return to Greece. 

More from Brussels...

Eurogroup head Jeroen Dijsselbloem has said that ministers decided lenders' experts will go back to Athens to work on an additional package of reforms in tax, pension and the labour market. 

He added that there is no political agreement on signing off on a Greek reform review yet. 

Disselbloem also told reporters that there is no liquidity issue in the short-run for Greece. But added that reaching an agreement on the Greek reform review is needed for "confidence reasons" .

According to data from Tradeweb, Greek 10-year government bond yields fell 25 basis points to 7.7pc, its lowest level in five days after the Eurogroup reached a deal for bailout talks to resume.  

Greece will take relief measures in exchange for further reforms legislated for after 2019, a Greek government official said on Monday after Athens and its lenders reached a deal to resume negotations over its bailout review.

"For whatever measures we pre-legislate, we will at the same time legislate offsetting measures which will not add even half a euro of austerity," the official, speaking on condition of anonymity.

 Report from Reuters

 Eurozone finance ministers and Greece agreed on Monday to resume negotiations over its bailout review, a Greek government official said.

The official said technocrats representing the lenders would return to Athens immediately after February 27 with a view to 'concluding a staff level agreement within a few days'.

Early reports are suggesting the Eurogroup meeting went well. 

Here's our full report by Szu Ping Chan on the CBI factory orders data which was released earlier today: 

UK manufacturing order books swelled in the three months to February as the weaker pound boosted output but pushed up expectations of factory gate prices to a near six-year high, according to a survey.

The Confederation of British Industry (CBI) said order books improved for the fourth straight month over the quarter, hitting the highest level in two years.

Order strength was driven by mechanical engineering and the metal products industries, as optimism about production across the sector rose to the highest in more than three years.

The CBI's survey of 471 manufacturers showed 43pc of companies expected output to rise over the next three months, compared with 10pc of companies that expected a fall.

The resulting positive balance of 33pc was the highest since September 2013.

Ruth Gregory, an economist at Capital Economics, said the data showed the "manufacturing sector is getting back on to its feet" following a lacklustre year in 2016. 

Ms Gregory said the survey suggested the sector was on course to grow by around 1.5pc this quarter, following a strong performance at the end of last year.

"With manufacturing exports set to benefit from the fall in sterling and solid demand from abroad, the future looks more promising for manufacturing activity than it has done for some time," she said.

Read the full story here

Euro zone finance ministers will discuss on Monday if they can send a mission of experts back to Athens to prepare a review of Greek bailout reforms needed for new loan disbursements to the country,  Jeroen Dijsselbloem, Eurogroup president said this afternoon. 

"We've had intense talks with these institutions and Greek governments in order to clear the ground for the mission to return to Athens.

"In the Eurogroup we will discuss whether we we've come to that point because that is my goal to get the mission back in Athens on the ground to talk about all the difficult stuff that’s still need to be sorted out," he told reporters.

 Eurozone finance ministers should not be hurried to reach an agreement with Greece on reforms Athens must deliver to get new cheap loans because of elections in several European countries, Belgian Finance Minister Johan Van Overtveldt said.

"Of course elections may always pose a problem when trying to get good decisions but on the other end, we shouldn't take... half-baked solutions because elections are coming up," Overtveldt told reporters on entering a meeting of ministers on Greece.

"There certainly is a major time frame by the end of June when Greece has to put up 7 billion euros for payments to the ECB and the IMF and that's of course a very important point in time," he said.

"If we can decide in a very well-reasoned and well-argued way earlier, why not? But let’s take things as they come," he said.

Quotes from Reuters

Institutions representing Greece's lenders have reached a common position on what is needed to close a review of Greek bailout reforms that might help euro zone ministers agree to send experts back to Athens to conclude the review, German finance minister Wolfgang Schaeuble said today. 

"I believe the institutions have a common position and that we will get to a point today where there technical mission can go to Athens so we can get a result," Schaeuble said on arriving to a meeting of euro zone finance ministers.

 Quotes from Reuters

Eurogroup head Jeroen Dijsselbloem has said eurozone finance ministers will discuss if lenders' experts can return to Athens. 

He said that the IMF's position on Greece is unchanged, adding that he wants them to take part in the Greek bailout but that they need Greek debt to be sustainable. 

Dijsselbloem told reporters in Brussels ahead of the Eurogroup meeting that there is no urgent need for money in Greece, adding that liquidity is good until the summer. 

He said: "I want to close the Greek reform review as quickly as possible, but reforms are complex". 

The Greek economy is gradually recovering, he said.  "We need to strengthen that, no reason to talk of crisis." 

He will come back to discussing more debt relief measures at the end of the Greek bailout in 2018. 

Finance Minister Wolfgang Schaeuble vowed to fight any forms of protectionism, saying that customs wars would fail in a globalized world.

Schaeuble also rejected criticism of Germany's wide trade and current account surpluses and reiterated his view that the euro exchange rate was a bit too low.

"In a globalised world, globalised economic protectionism is not successful," Schaeuble told members of the Belgium Business Federation in Brussels. "We will fight against any protectionism." He spoke in English.

The European Commission and the United States have urged Germany to lift domestic demand and imports to help reduce global economic imbalances and fuel global growth, including within the euro zone.

Turning his attention to Britain's vote to leave the European Union, Schaeuble said he has the feeling that some members of the British government are only starting realize how difficult the divorce talks are going to be.

Report by Reuters

Afternoon trading volumes are likely to be muted as Wall Street is closed today due to Presidents Day. 

Slovakia's finance minister  Peter Kažimír  is in Brussels today for the Eurogroup meeting. Euro zone finance ministers are meeting in the Belgian capital to assess Greece's progress in fulfilling the conditions of its bailout. here's what Mr Kažimír had to say ahead of the gathering: 

French government bond yields spiked this afternoon, after a poll showed far right candidate Marine Le Pen narrowing the gap with her centrist opponents in the race for the French presidency.

A poll released earlier today showed Le Pen 16 points behind centrist Emmanuel Macron, down from 20 points previously in a second-round run off scheduled for May.

In its wake, France's ten-year government bond yield rose by 7 basis points to 1.14pc, that's its highest level in almost two weeks. 

Meanwhile, short-dated German government bonds fell to a record low.  

Last week, I put together an explainer detailing why markets are fearful of a Marine Le Pen victory. Read it here.

British Prime Minister Theresa May's office was not involved in Kraft Heinz's decision to withdraw its $143 million bid for Unilever, her spokesman said this afternoon.

On Sunday, the Financial Times reported that May, who previously criticised Kraft's 2010 acquisition of another British firm, had ordered officials to examine the proposed deal and whether it merited government intervention. 

"I think the issue of the withdrawal from the Unilever deal by Kraft is an issue you should put to Kraft. Number 10 wasn't involved in it," the spokesman told reporters.

"The simple fact is that the bid has been withdrawn so I don't have a view on a bid that doesn't exist."

Report from Reuters

Shares in Rolls-Royce have bounced 5pc higher this morning after Goldman Sachs upgraded its rating to 'buy' and added the FTSE 100 stock to its conviction list.

Our industry editor Alan Tovey has the details: 

Rolls-Royce has been given a lift by Goldman Sachs, with an upgrade from the heavyweight broker sending the company’s stock soaring.

Shares in the FTSE 100 business surged 5.2pc to 705p in early trading after Goldman raised its rating from "neutral" to "buy" and added Rolls to its “conviction list” of preferred stocks.

The upgrade follows Rolls reporting a record £4.6bn loss last week as it took a massive hit on the value of its $38bn of foreign currency investments intended to protect it from currency swings.  Fines of almost £700m after Rolls admitted corruption practices dragged it further into the red.

Until Goldman's upgrade gave them a lift, Rolls shares had fallen 10pc since it posted the dire results.

Read the full story here

European bourses were mixed this lunchtime as Kraft's decision to withdraw its takeover bid for Unilever weighed on the broader market. 

Meanwhile, telecoms and banking stocks made robust gains. 

Just after midday: 

• FTSE 100: -0.11pc
• DAX: +0.51pc
• CAC 40: -0.06pc
• IBEX: +0.28pc

 Mike van Dulken, of Accendo Markets, said: "Equities are making a positive start to the new trading week, albeit without any US influence on account of President's Day. The data slate is also very light although politics remain spicy as the Brexit Bill is debated by UK Lords and the Dutch, French and German election campaigns/polls keep investors on their toes. Kraft-Heinz's withdrawal of its bid for Unilever is holding the UK index back by 12pts but the stock has given up only half Friday's 13pc merger inspired gains.

"Peer defensives (ex-telcos) are suffering from evaporation of Friday's Unilever M&A excitement. Banks (ex-STAN) are leading the way into earnings season thanks to RBS finding an alternative way to satisfy EU state-aid rules and some broker upgrades in the sector. Telecoms are higher thanks to M&A talk from Japan/US, which along with the Banks are helping Germany's DAX outperform." 

German Finance Minister Wolfgang Schaeuble doesn't expect euro zone finance ministers to reach a final deal on Greece at their meeting today in Brussels, a spokesman said this afternoon. 

Euro zone finance ministers are meeting in the Belgian capital to assess Greece's progress in fulfilling the conditions of its bailout.

"We do not expect a final agreement from the Eurogroup meeting, rather it is an evaluation of a progress report, and with this expectations the minister left to Brussels," Finance Ministry spokesman Juerg Weissgerber said.

"We hope that the institutions can return relatively quickly to Greece," he added.

Quotes from Reuters

Jon Cox, head of European consumer equities at Kepler Cheuvreux, takes a look at why Kraft Heinz withdrew its £115bn merger bid for Unilever over the weekend.

He highlights that sustainability is top of the agenda at Unilever, adding that it certainly is not the top of the agenda in Kraft Heinz. 

Cox said: "That was probably a stumbling block." 

He also wasn't sure Kraft would really be interested in Unilever's personal care business. 

Tressis Gestion CIO Daniel Lacalle told CNBC earlier that he thinks the Kraft - Unilever story is "far from over".

Although he expects to see some weakness in the shares after the company went  on defense mode. Gestion doesn't see how Unilever will remain independent in the next five years. 

Ahead of the Eurogroup meeting later today, it was reported that the head of the eurozone bailout fund said Greece will need less in emergency loans from international lenders than originally agreed in its third bailout programme due to a better-than-expected budgetary developments. 

Klaus Regling told German newspaper Bild that at the end of Greece's money-for-reforms package in August 2018, the European Stability Mechanism (ESM) will "probably have paid out far less than the agreed maximum amount of €86bn" because the Greek budget was developing better than expected.

This afternoon eurozone finance ministers will convene in Brussels to assess Greece's progress in fulfilling the conditions of its bailout. 

Bavarian Finance Minister Markus Soeder called for a tougher stance in negotiations with Greece, suggesting Athens should only get fresh aid from its lenders against additional collateral such as cash, gold or real estate.

"We need a plan B," Soeder told Bild newspaper.

The review of the Greek bailout programme has been beset by delays and disputes between Athens and its European Union and International Monetary Fund creditors. As disagreement has arisen over Greece's fiscal targets, debt relief and promised reforms, fears have grown that Europe could face a new financial crisis.

Greece has said it cannot cut pensions any further as demanded by the International Monetary Fund while some of its European lenders, led by Germany, have rejected the IMF's demand to grant it debt relief of some sort - perhaps on payments and maturity - now.

The Fund has insisted on debt relief and precautionary fiscal measures to ensure that Athens can meet its fiscal targets before it will consider participating in the bailout.

Report from Reuters 

Back to Unilever, Gavan Nolan, of IHS Markit, has highlighted that Unilever is the best EUR CDS performer this morning after Kraft withdrew its merger proposal yesterday. That means the cost of insuring Unilever's debt against default has fallen.

UK factory orders were stronger than expected this month and price growth neared a six-year high, according to data from the Confederation of British Industry. 

Trends in manufacturing showed that the UK manufacturing order balance book rose by 9 in February, compared to an increase of 5 in January and ahead of expectations of a reading of +3. 

Meanwhile the CBI manufacturing price balance hit its strongest level since April 2011 to +32, compared to +28 in January. 

Jeremy Cook, of World First, flags that it is a year ago today when David Cameron announced the referendum on EU member. Since then the pound has fallen more than 10pc on a trade weighted basis. 

The pound jumped in early trade ahead of the Lords Brexit debate. 

The upper house of parliament was set to begin debating the bill which will pave the way for the formal start of talks on how Britain will leave the European Union, the triggering of Article 50.

Joshua Mahony, of IG, said: "The UK’s focus falls on the House of Lords today, as the Brexit debate continues to dominate. Whilst Parliament decided it was largely down to the Prime Minister to decide when to enact article 50, there are fears that the House of Lords will attempt to make amendments.

"Given the holiday over in the US, traders will be keeping a keen eye on the pound for any significant volatility as the House of Lords discusses whether to approve the Brexit bill."

Sterling rose by as much as 0.32pc to $1.2483 against the US dollar. It also snapped its losing streak against the euro, trading up 0.2pc at €1.1747.

Just two-and-a-half hours into today's trading session, the FTSE 100 has pared its gains and is struggling to gain momentum as Unilever suffers a sharp fall following a move by Kraft to withdraw its merger proposal. 

The blue chip index is currently trading just 3.62 points higher, or 0.05pc, at 7,303.61.

It's worth noting that trading volumes are likely to be depressed as the US celebrates Presidents Day. 

Bovis Homes is also on the back foot this morning. Languishing at the bottom of the mid-cap index, shares are off by almost 10pc and on track for their worst day in eight months after the house builder reported a slump in full-year profits. Sam Dean has the details: 

Struggling British housebuilder Bovis Homes has said it will build fewer homes this year after reporting a drop in pre-tax profits in its full-year results.

The FTSE 250 company issued a shock profit warning at the end of last year, with chief executive David Ritchie stepping down just days later, as it revealed that it had built fewer homes than expected in 2016.

In its final results for the year ending December 31, Bovis said it had suffered a “difficult” 12 months and revealed plans to slow its rate of production to around 10 to 15pc below the 2016 level.

The company’s pre-tax profits fell 3pc to £154.7m last year, compared to the £160.1m it posted in 2015. The figures came despite Bovis saying in December that pre-tax profits were likely to be between £160m and £170m, and sent shares down more than 7pc in early trading.

Read the full story here

Mike Grayer, partner and head of corporate finance at accountancy firm, Menzies LLP,  weighs in on Kraft abandoning its takeover bid of Unilever: 

“There has been some speculation about whether the takeover offer by Kraft Heinz was motivated by the weak value of the pound but in my opinion this is unlikely to be the case. The continued buoyancy of UK equity markets is negating the effect of the dollar / pound exchange rate and is likely to keep opportunistic multinationals at bay. It is more likely that this proposed deal was motivated by a straightforward desire to consolidate and drive economies of scale.

“While UK plc is well placed to fight off unwanted takeover attention from overseas, SMEs may wish to take advantage of the exit opportunities that current market conditions are generating.”

Away from Unilever, shares in RBS have jumped by 6pc to the top of the blue chip index after it abandoned the planned sale of its Williams & Glyn unit. Sam Dean reports: 

Shares in Royal Bank of Scotland jumped after confirmed plans to halt the sale of its Williams & Glyn division, instead creating a fund to help smaller banks.

RBS shares shot up more than 6pc in early trade, to 256.8p, after the bank reached a preliminary deal with HM Treasury and the European Commission that means it will no longer need to sell the division.

The bank, which is 73pc owned by the UK taxpayer, was ordered to sell the network, which is made up of 314 branches, as a condition of its state bailout in 2008.

The new plan, reported at the end of last week, will see RBS deliver a fund, administered by an independent body, that challenger banks can access to increase their business banking capabilities.

It will also provide funding for challenger banks to “help them incentivise SMEs to switch their accounts from RBS pain in the form of ‘dowries’ to eligible challenger banks”.

Read the full story here

Michael Hewson, of CMC Markets notes, that there had been widespread speculation that this bid may well have turned out to be a rather protracted affair given some of the politics involved.

"Kraft’s quick about turn appears to have drawn a line under that, over concerns that any public battle could have the potential to turn increasingly bitter.

"Kraft’s track record on this was also undoubtedly a factor particularly given the Cadbury experience in 2010. While the share price fall is its biggest in thirteen years, the shares are still higher than they were prior to the Kraft bid becoming public. While this bid appears to have fallen at the first fence it undoubtedly keeps the focus on a sector that could see further consolidation." 

Meanwhile, former business secretary Vince Cable tweeted about Kraft's bid for Unilever: 

Just as Unilever was bedding in for a long fight, the two companies announced a cessation of 'hostilities' with a statement of holding each other in “high regard”. In its wake, Credit Suisse raises a series of questions that investors should think about: 

1. Unilever has been given a sharp wakeup call that it cannot disregard. Its reluctance to engage with Kraft Heinz (KHC) is understandable, but will it now feel it needs to offer something else to its shareholders?
2. At the very least the prospect of KHC taking its leverage to over 6x Ebitda begs the question: is Unilever making best use of its balance sheet on behalf of investors? Moving to 3x Ebitda would allow Unilever to do a €20 billion share buy-back or a €7 per share special dividend (17pc yield). The former would be double digit accretive, the latter only c7pc dilutive.
3. Or might this encourage Unilever to be more aggressive on M&A? Whilst KHC appears to have (irrevocably?) walked away, it is clear that investors are willing to back big deals (eg BAT/Reynolds and Reckitt/Mead).
4. Might management even contemplate making a commitment to demerge into FoodCo and HPCCo? Two businesses that might then have licence to accelerate their own inorganic developments. 
5. What this approach does tell us is that KHC’s appetite is far from satiated, and size is no obstacle at all to their ambitions. Their presence will likely continue to loom heavily over all industry participants. 

Credit Suisse lifted it price target on Uliever by 5pc to €42 and maintained its "neutral" rating, in recognition that you cannot set the clocks back. 

Alan Erskine, of Credit Suisse, said: "We expected Unilever to respond to this episode by releasing some value to shareholders (some of whom no doubt are disappointed that the prospect of a control premium evaporated so soon after it first appeared)." 

Darren Shirley, of Shore Capital, isn't surprised to see Unilever's stock ease back from record highs achieved on Friday. 

However, the broker remains positive on the FTSE 100 stock as it believes Kraft Heinz interest reflected the excellent medium to long term potential from Unilever with its leading emerging market exposure (c59pc in FY2016).

"Strategic corporate activity has also reduced its exposure to low growth food and packaged grocery, engineering a 60pc exposure to global HPC (including 40pc PC exposure) including recent acquisitions such as Dollar Shave Club, 7^th Generation and it’s a range of premium skin care brands. In addition, through it ‘connected for growth’ programme it has also been sufficiently confidently to raise its annual margin accretion guidance to 4—80bp per annum over the medium term.

"Whilst top-line growth has slowed in recent quarters, Unilever is not alone in this respect and 3.7pc USG in  FY2016 is in the upper quartile of global players, and we believe the group will be very placed to benefit as and well global markets recover."

Meanwhile, in the first 20 minutes of trading, it's worth noting that $13bn has been wiped off Unilever's value: 

After its best day in 30 years on Friday, Unilever is now on track for its worst day in more than 13 years with shares down 8.8pc. 

Thomas Buckley, of Bloomberg, highlights that Kraft's withdrawal of the Unilever merger proposal is "in keeping with Warren Buffett's aversion to go hostile". 

Analysts weigh in on Kraft's decision to abandon Unilever takeover bid:  

Although the Kraft Heinz deal for Unilever met a very quick end, Rebecca O'Keeffe, of Interactive Investor, says the market has been quick to embrace the wider possibility of future potential mergers and acquisitions. 

"The abrupt withdrawal of the Kraft Heinz offer leaves huge questions for Unilever shareholders. Typically, even a failed bid like this one will leave the share price trading at a premium to its pre-bid level, as investors factor in the possibility of either a future bid or increased interest from the wider market. However, not only does Unilever's board appear very hostile to a bid, but the strength of Dutch competition laws which potentially protect employees from aggressive asset stripping type deals makes any takeover by 3G extremely difficult." 

Kathleen Brooks, of City Index, expect sthe chief reason to drop the bid was concern about the political atmosphere in Britain, which is currently against foreigners making bids for “national treasures”, even half-Dutch ones like Unilever.

"Now that the deal is off the table, and it doesn’t look like Kraft is planning a new offer any time soon, we could see both company’s share prices fall back, which could weigh on the US index once the US comes back from the Presidents’ Day holiday." 

 Neil Wilson, of ETX Capital, thinks that the complete disaster that was Kraft's acquisition of Cadbury was a deal breaker and probably should have been a reason for Kraft to stay clear.

"The more you think of it the more it looks hubristic. I'd be looking at Mondelez now again which could be in for a major bump today after sliding Friday as Kraft is clearly in the market for a purchase and it is an obvious target. Unilever shares might be rough going tomorrow. There's very little chance anyone is big enough to take them on. For the government there must be a lot riding on defending British jobs and that's going to make the hurdle for future foreign acquisitions all the higher, even if the pound's weakness makes some companies appealing." 

Although Kraft Heinz management announced its intention to “amicably” withdraw its proposal, Michael Hewson, of CMC Markets, doubts there was anything amicable about it. 

"The proposed deal, whatever its merits, was always likely to attract attention given the completely different approaches each company has to conducting its everyday business. That’s even before the undoubted toxicity around the Kraft brand here in the UK after its management shamefully reneged on promises about jobs when it took over Cadbury’s in 2010. The whole tawdry episode left a rather unsavoury taste in the mouth even more so when Kraft then went and spun Cadbury’s off into Mondelez less than 2 years later.

"Ultimately these sorts of talks require a certain amount of good faith on the part of both parties. In light of Kraft’s recent history that was always likely to be stretch, notwithstanding the potential political opposition in the Netherlands, as well as here in the UK." 

Stepping away from Unilever for a moment, European shares opened higher this morning buoyed by a bounce in telecoms stocks. 

Here's a snapshot of the current state of play: 

 Mike van Dulken, of Accendo Markets, said: "​Calls for a positive start to the new trading week, one without the US today on account of President’s Holiday, come after US bourses closed positive on Friday and despite a mixed session in Asia overnight. While the FTSE is called higher this morning, note Kraft-Heinz has withdrawn its offer for Unilever, news which helped the latter rally over 13pc on Friday and contribute over 24pts to the index which gained only 22pts itself." 

Shares in Unilever nose-dived this morning after Kraft Heinz withdrew its £115bn merger proposal. 

The FTSE 100 stock fell by as much as 9.03pc to £34.54 and is now on track for its worst day in almost nine years. On Friday, shares rallied by as much as 14.95pc to an all-time high of £38.48 after Kraft announced the offer. 

Yesterday, Kraft withdrew its offer because it felt it was too difficult to negotiate a deal following the public disclosure of its bid so soon after its approach to Unilever, according to people familiar with the matter who requested anonymity to discuss confidential deliberations.

Kraft will now be bebarred by the UK Code from any further approach for six months. 

Here's our full report on Kraft withdrawing its £115bn takeover proposal by retail editor Ashley Armstrong: 

Kraft Heinz has dramatically abandoned its £115bn swoop on Unilever as its billionaire owners retreated from political opposition to what would have been the biggest ever takeover of a British company.

The withdrawal came hours after it emerged that Prime Minister Theresa May had ordered officials to scrutinise the bid for the UK’s third-largest listed company, following high-level, separate talks between Number 10 and the two sides.

The Telegraph understands they included conversations with top executives at 3G Capital, the Brazilian private equity firm behind Kraft Heinz.

Unilever had angrily rejected its US rival’s approach on Friday and issued a terse statement saying the low-ball $50-a-share proposal was not “the basis for any further discussions”. 

Despite the rebuttal and as late as mid-afternoon on Sunday, Kraft Heinz was determined to pursue a deal. Hours before its withdrawal company insiders said the US food giant was prepared to offer far-reaching commitments on British and Dutch jobs and factories.

Sources close to the discussions said that Kraft Heinz’s biggest backers - the US mogul Warren Buffett and 3G’s Jorge Paulo Lemann -  had been surprised by the ferocity of opposition to their advances from both Unilever and Westminster.

In crisis talks on Sunday morning, US time, the pair were forced to accept there was no chance they would succeed within the 28-day deadline imposed by UK takeover rules.

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Good morning and welcome to our live markets coverage. 

From leader to laggard, Unilever this morning is the biggest faller on the FTSE 100 after Kraft Heinz withdrew their £115bn takeover proposal. Shares have nose-dived by more than 8pc in early trade. On Friday, the FTSE 100 stock soared 13.5pc to an all-time high after Kraft announced the offer. 

Elsewhere today, Greece is back in focus ahead of a Eurogroup meeting which takes place at 1pm  in Brussels. 

Also on the agenda: 

Full-year results: Hammerson, Bovis Homes Group

Interim results: Gemfields, Sareum Holdings, Vedanta Resources, London Finance & Investment Group

Economics: Rightmove HPI m/m (UK), CBI industrial order expectations (UK), PPI m/m (GER), consumer confidence (EU)