In 2017, the US-based food company Kraft Heinz attempted to acquire the British-Dutch consumer goods company Unilever for $143 billion. The proposed acquisition would have been one of the largest in history and would have created a global food and consumer goods giant. However, the deal ultimately fell through, and one of the reasons cited was the issue of contagion bias.

Kraft Heinz had a reputation for being a cost-cutting and efficiency-driven company, and there were concerns among Unilever executives and investors that if the two companies were to merge, the culture and values of Unilever could be tainted by the more aggressive and cost-focused approach of Kraft Heinz.

This concern was driven by the belief that the negative attributes of Kraft Heinz would "contaminate" Unilever, even though there was no evidence to suggest that this would be the case. The idea of contagion bias also played a role in the public perception of the deal, with many commentators expressing concerns that the merger could have a negative impact on the values and reputation of Unilever.

Ultimately, the proposed acquisition was abandoned, in part due to concerns around contagion bias and the potential negative impact that the merger could have on the culture and values of Unilever.

This story shows how contagion bias can play a significant role in business decisions, particularly in the context of mergers and acquisitions. By recognizing the potential influence of this bias, executives and investors can make more informed and rational decisions that are based on evidence rather than unfounded beliefs.

Post 1: Contagion Bias

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