Unilever sells spreads business for $8.1bn

Bloomberg

Unilever agreed to sell its margarine and spreads business to KKR & Co. for $8.1 billion, ridding the Anglo-Dutch consumer-goods giant of one of its worst-performing units as it focusses on faster-growing food and personal-care niches. The private equity firm’s purchase of the division, whose brands include Flora and I Can’t Believe It’s Not Butter!, is the biggest leveraged buyout announced in Europe this year. Completion is expected in the middle of 2018, the companies said.
“Sprexit has finally happened,” Warren Ackerman, an analyst at Societe Generale, said.
The sale advances Chief Executive Officer Paul Polman’s effort to focus Unilever on faster-growing brands such as Pukka Herbs tea and Sir Kensington’s condiments. The company, like rivals such as Nestle SA, is grappling with changing tastes that mean some of its older products are out of favour as consumers seek fresher, healthier alternatives. The London- and Rotterdam-based company is under pressure to simultaneously cut costs and accelerate sales after fending off an unsolicited, $143 billion takeover bid this year from Kraft Heinz Co.
Unilever said it would return the net cash realised from the transaction to shareholders, “unless more value-creating acquisition alternatives arise.”
KKR beat out competition from Apollo Global Management and CVC Capital Partners, according to people close to the matter. CVC and Apollo declined to comment.
The deal overshadows other buyouts announced this year. After a long takeover quest, private equity firms Bain Capital and Cinven acquired German pharmaceutical maker Stada for 5.4 billion euros including debt in August. In September, Hellman & Friedman agreed to buy payment processor Nets for about $5.2 billion.
In selling the spreads unit, Unilever is parting with one of its most historic businesses. The world’s first margarine factory was founded in the Netherlands in 1872, and it merged with a rival business in 1927 to form
Margarine Unie. Two years later, the combined company joined UK soapmaker Lever Brothers to form Unilever. The sale “marks a further step in reshaping and sharpening our portfolio for long-term growth,” Polman said.