Unilever sells top brands to win Bestfoods

Unilever, the Persil to Flora giant, yesterday said it had agreed to sell a cluster of brands, including Oxo cubes and Cup a Soup, in exchange for regulatory clearance of its $20.3bn (£13.9bn) acquisition of Bestfoods, the US food group.

Unilever, the Persil to Flora giant, yesterday said it had agreed to sell a cluster of brands, including Oxo cubes and Cup a Soup, in exchange for regulatory clearance of its $20.3bn (£13.9bn) acquisition of Bestfoods, the US food group.

The European Commission granted its conditional approval to the deal, which will create the world's biggest pure foods producer, after Unilever made "substantial concessions to resolve competition concerns".

The competition watchdog said without the undertakings, the deal "would have led to overlaps in nearly 150 separate food-related markets". The total value of the brands being sold, in terms of annual sales, is 500 million euros (£300m).

Unilever shares closed up 4p at 423.5p on relief that the deal had been approved without having to enter a second, three month, investigation.

The full list of products to be sold is: Unilever's Batchelors range in the UK, including Cup a Soup, SuperNoodles and Bean Feast; Oxo and Royco in Europe, McDonnels in Ireland, Bla Band in Scandinavia and Bestfoods' Lesieur mayonnaise label in France. But Unilever will hang onto Bestfoods' top-selling brands, including Knorr soups, Hellmann's mayonnaise, Ambrosia desserts, Pot Noodle, Bovril and Marmite.

One industry analyst said: "It's a shame they have to sell some of [the business]. But to our knowledge, Unilever put these brands up as a bargaining counter to get the deal done. In the long run, that is more important than having to sell a few old brands."

Unilever's co-chairmen, Niall FitzGerald and Anthony Burgmans, said: "We are pleased that the transaction has been given the green light ... As anticipated, some parts of our business have to be sold, however the acquisition of Bestfoods will bring major international brands to our business." Shareholders of both companies are due to vote on the deal on Monday.

Analysts said potential buyers of the brands could include Doughty Hanson, Europe's second-biggest buyout firm. The group recently paid £1.1bn for Rank Hovis McDougall. At the time, Niel Doughty, chief executive, told Bloomberg: "We intend to grow the business organically and make acquisitions to expand in Europe." But he could face competition from rivals, such as Hicks, Muse, Tate & Furst and Kohlberg Kravis Roberts of the US.