Unilever

The latest M&A news amid Unilever's portfolio shuffling: 

Jan. 26: Anglo-Dutch consumer products group Unilever will give its personal-care portfolio a makeover with the $411.5 million purchase of TIGI International Ltd. The cash deal will allow the maker of Dove, Axe for Men, Suave and Sunsilk hair care brands to enter the so-called premium segment in a single bound. -- Renee Cordes

Meanwhile, the then-latest move in Unilever's restructuring came July 28 when the company unveiled plans to sell its North American laundry unit to private equity firm Vestar Capital Partners for an initial $1.45 billion in cash and shares. (Vestar said it had closed the deal in September.) The divestiture is part of the Anglo-Dutch food group's plan to sell non-strategic businesses that do a collective €2 billion in sales. With the laundry products deal, which includes such brands as Snuggle fabric softener and Wisk detergent, the company is about three quarters of the way through its divestiture campaign Cordes noted. Unilever is turning toward emerging markets as it revamps.

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The last divestiture came July 21, when the company said it would sell its Bertolli olive oil and vinegar products to Grupo SOS for €630 million ($1 billion). The company said it planned to hang on to the other Bertolli products, including sauces, pasta and frozen meals. See more on that deal here: Lenders pour out $1B loan for Bertolli buy.

Also on the edible oil front, the company said July 10 it would sell its Turkish Komili olive oil brand to Anadolu Group's Ana Gida for undisclosed terms. In June, the company sold its palm oil operations in Cote d'Ivoire and concurrently moved to boost its holdings in a regional soap business.

The company's latest deal targeting emerging markets came Feb. 4, when Unilever unveiled plans to buy Russia's top ice cream manufacturer Inmarko for undisclosed terms to both bolster its position in Russia and in ice cream overall.

The target has annual sales of nearly $170 million, a strong presence in Eastern and Central Russia and is booming in Kazakhstan, The Deal's Jonathan Braude noted. The deal followed a move in November that advanced the sell-off of the London-based company's nonstrategic brands. The company said in November 2007 it would sell its Lawry's and Adolph's brands of marinades and spices to McCormick & Co. The news came two weeks after Unilever on Nov. 5 said it would sell its Boursin cheese brand to Paris-based Fromageries Bel SA for €400 million ($593 million).

CORPORATE MAKEOVER

Meanwhile, a day after Cadbury Schweppes plc said it would separate its North American beverage unit from its candy business (See a related Dealwatch for more), buzz surfaced March 16, 2007, that Unilever might also split in two, or even draw a private equity offer for the whole company. And then the debt markets soured, throwing a wrench into Cadbury's auction, forcing the food and beverage company to consider spinning off, rather than pursuing an outright sale for, the U.S. drinks business, it said Aug. 1. The next day, Unilever unveiled plans to sell assets that collectively account for nearly €2 billion in sales, beginning with its U.S. laundry line, which includes detergent brands Wisk and All as well as fabric softener Snuggle, brands that do $1.1 billion in business, alongside plans to cut 20,000 jobs, closing up to 60 factories.

Consumer products peer Procter & Gamble Co., too, unveiled plans for divestitures, on Aug. 3, 2007. Some possible divestitures cited in a July study from Lehman Brothers Inc.'s Lauren Liberman and tax expert Robert Willens included Duracell batteries, Braun appliances, Pringles potato chips, and Folgers coffee (sold in June 2008 to J.M. Smucker Co. for $3.3 billion).

But what will the fate of each be, The Deal's Lisa Gewirtz-Ward asked in August, especially given debt market concerns?

Over the past few years, private equity firms have bought, sold and merged scores of consumer product companies, often for prices so high that strategic buyers, who traditionally were willing to pay more for companies, were pushed to the sidelines. ... But now banks are recalibrating how much and under what terms they will lend these firms. Once willing to pay double-digit multiples for almost anything generating decent cash flow, they're now on the sidelines, and auctions will be likely to generate lower prices.

"It's too bad they didn't sell these assets six months ago," one source said.

SWEETEST OFFER

Unilever is in the midst of an ongoing transformation, and the company has spent years churning its portfolio. When he took over as chairman in May 2007, it was thought Michael Treschow would likely accelerate the pace for the company, still struggling after pruning its portfolio from 900 brands in 2001 to about 400 in the beginning of the year, and trailing P&G in sales growth. The company has spent years streamlining to bring it under central management, as CEO Patrick Cescau sought to simplify operations.

• In 2006, Unilever unloaded the majority of its European frozen-foods business to Permira for $2.2 billion, becoming at the time the latest food and household products retailer to shave off some assets in recent months.
• Permira reportedly muscled past an exhaustive suite of prospective suitors, including Ireland's Kerry Group plc, which had been expected to team up with Blackstone Group LP and J.P. Morgan Partners LLC for Unilever's Birds Eye brand of frozen veggies; the U.K.'s Young's Bluecrest Seafood Ltd.; and London-based private equity investor CapVest Ltd., which owns Findus brands in Norway, Sweden and France.
• Unilever scaled back earlier in 2006 with the sale of its frozen-food business in Spain to Bonduelle and in May, washed its hair of its Finesse hair-care brand in the U.S. and Canada and its Aqua Net brand in the U.S. to Britain's Lornamead Brands Inc.

Dealwatch executive summary
The Date	The Action
1.26.09 7.28.08 7.21.08 2.04.08	Unilever takes TIGI. Unilever sells off North American laundry products. Unilever sells Bertolli olive oil. Unilever feasts on ice cream.
11.15.07	Unilever cuts the spices.
11.05.07	Unilever sheds Boursin cheese.
8.2007	Unilever, P&G announce slim downs.
3.16.07	Could Unilever do like Cadbury and split in two?
8.28.06	Unilever unloads most of its European frozen foods biz to Permira for $2.2 billion. (See related deal memo.)
7.12.06	Premier Foods takes Campbell's U.K. and Irish businesses. (See related deal memo.)
6.27.06	Thomas H. Lee Partners hopes to unload Michael Foods.
5.23.06	Nestle takes Uncle Toby's snacks and soups for $670 million.
5.02.06	Unilever unloads Finesse, AquaNet.
3.16.06	After paying $580 million, Del Monte chews on Milk-Bones.
3.02.06	Del Monte bags Meow Mix with $705 million.
9.2005	Unilever announces a strategic review for its European frozen foods biz.
Source: The Deal, press reports

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