Unilever takes fight to P&G with Alberto Culver deal
Tuesday 28 September 2010
Unilever has agreed a $3.7bn (£2.3bn) deal to buy the personal care company Alberto Culver, in a move that will see it overtake Procter & Gamble (P&G) as the world's leading manufacturer in the hair conditioning market.
The takeover will bring brands including TRESemmé, VO5 and St Ives to Unilever's portfolio, and increase the rivalry in the haircare market with P&G and L'Oreal. "Their people have done an excellent job of building an impressive range of brands," Paul Polman, Unilever's chief executive, said of Alberto Culver, adding that the deal "will help build on our strong global positions in both the haircare and skincare categories". Unilever's household, food and personal care brands range from Persil to Dove, and Flora to Lipton tea.
Alberto Culver, which traces its roots back 50 years, operates in nine countries, has six manufacturing facilities and employs around 2,700 people.
Martin Deboo, an analyst at Investec, called the proposed acquisition a "sensible deal at a sensible price", adding it would strengthen its position in haircare in developed markets. He went on: "It also suggests to us a move to counter-attack P&G where it might hurt. As such, it represents a welcome further signal of renewed commercial aggressiveness under Paul Polman."
The deal means Unilever overtakes P&G to become the world's leading conditioner manufacturer, while consolidating its second position in shampoo. It will also see the group overtake Henkel to move to third in the hair-styling market. It also marks Unilever's second significant deal in a year after the €1.2bn acquisition of Sara Lee's personal care operations. Sara Lee, which is being scrutinised by the European regulators, would bring the Radox and Sanex brands to Unilever.
Mr Polman said: "Personal care is a strategic category for Unilever and growing rapidly." A decade ago it represented 20 per cent of the group's turnover and has now grown to over 30 per cent. Its personal care product sales hit €6.7bn over the first half of 2010, up almost 8 per cent over a year earlier.
Mr Polman stressed the group's principal strategy was to focus on organic growth, with a view to doubling the company's size. "In-fill acquisitions such as Sara Lee and Alberto Culver will ultimately supplement the company's ambition through the addition of key brands to the company's portfolio," Jeremy Batstone-Carr, an analyst at Charles Stanley said. James Edwardes Jones, at Execution Noble, said such investments would tilt the group's portfolio towards emerging markets "which, assuming Unilever's financial discipline remains intact, can only be a welcome thing".
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