March 18 (Reuters) - Unilever and Kraft Heinz held talks to merge Unilever's food business and Kraft Heinz's condiments division, the Financial Times reported on Wednesday, citing people familiar with the talks.
The discussions have now ended, the report said. Unilever declined to comment to Reuters, while Kraft Heinz, whose shares fell nearly 4%, did not immediately respond to a request for comment.
The two companies have been in recent months considering a potential merger of some of their food brands,
the report said, a deal that would have combined Heinz ketchup with Hellmann's mayonnaise to create a new entity worth tens of billions of dollars.
A tie-up would have underscored the pressures facing both consumer goods groups as they grapple with weaker demand for packaged foods and shift their portfolios toward faster-growing categories, according to the FT.
Bloomberg News reported on Tuesday that Unilever is in the early stages of weighing a separation of its food assets, citing people familiar with the matter, as it has been gradually moving away from food and toward beauty and personal care.
Kraft Heinz, meanwhile, had in February halted efforts to split the company, as the new CEO Steve Cahillane said was necessary due to deteriorating conditions in the food industry. The packaged-foods maker has also been struggling since its merger engineered by Warren Buffett and 3G Capital.
The talks with Unilever occurred before the U.S. group decided in February to drop plans for a break-up and instead invest $600 million in a turnaround under CEO Steve Cahillane, who took charge in January, the report said.
The proposed split would have separated its slower-growth grocery staples — including Oscar Mayer and Lunchables meal kits— from its sauces and spreads business that houses Heinz ketchup and Philadelphia cheese, the report said.
(Reporting by Kanjyik Ghosh in Barcelona, Sanskriti Shekhar in Bangalore. Editing by Jane Merriman)
