Unilever completes overhaul with £730m laundry unit sale
Tuesday 29 July 2008
Unilever completed the bulk of its asset fire sale yesterday after a private equity group secured its North American laundry business for $1.45bn (£730m), its second major deal in a week.
The deal is the Anglo-Dutch conglomerate's largest sale since announcing in August last year it was to divest a portfolio of non-core businesses with a combined annual turnover of €2bn.
The news sent its shares up almost 3 per cent to £15 in London yesterday.
Some investors speculated that it could lead to the group increasing its buyback programme, although a spokesman said the company had not decided what to do with the proceeds.
Unilever agreed to sell its laundry business in the US, Canada and Puerto Rico to Vestar Capital for a cash payment of $1.07bn and shares in the resulting company worth $375m.
A spokesman said: "The bulk of the selling programme has been completed with this deal. We have sold businesses with a turnover of €1.6bn out of the €2bn expected." The assets sold have brought in just over $3.6bn.
Vestar will merge the business, which has brands including Surf, Snuggle and Sunlight, with its existing Huish Detergents subsidiary to create a company called The Sun Products Corporation.
Unilever put the laundry division up for sale almost a year ago, and a spokesman for the company said: "We are happy with the result, we got a fair price. It took a while, but the beauty of not having a strict deadline to sell meant we could hold out on price."
Patrick Cescau, Unilever's group chief executive, said it was a good deal for shareholders and the business. "It puts our North American laundry people and brands into a company which is focused on the laundry category and which, with its new combined portfolio, is well-positioned to become a strong player in their market." He added that the laundry business will remain "an important category" for Unilever outside North America, with the deal allowing it to focus on boosting operations in Europe, Asia, Africa and Latin America.
This came just six days after the sale of its Bertolli olive oil and vinegar business to Spain's Grupo SOS for €630m (£500m). A spokesman said the group had held on to the brand's margarine, pasta sauce and frozen meals businesses as there was room for growth, but saw the olive oil business as almost a "commodity".
Among the businesses already sold under the overhaul plans were Boursin, the French cheese group, picked up by Le Groupe Bel for €400m in November. Later the same month it sold its marinades businesses Lawry's and Adolph's to McCormick & Company for €410m.
Unilever is seeking a successor to Mr Cescau, who is expected to stand down next May.
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