(By
Bob Blandeburgo )Anglo-Dutch Unilever PLC/AG (NYSE ADR:
UL,
UN)
on Friday made an aggressive play to expand its brand portfolio by
purchasing the personal care arm of U.S.-based Sara Lee Corp. (NYSE:
SLE).
Unilever will pay $1.87 billion (1.28 billion euros) in cash for the business, which includes brands like Sanex and Radox.
The acquisition is expected to strengthen the company's position in
skin care and deodorants in Western Europe, and build the brands in
emerging markets.
"There is a big opportunity to roll out these brands across their entire emerging market business," Evolution Securities Ltd. analyst Warren Ackerman told the Financial Times.
Ackerman said the deal would boost Unilever's European skin care
market share from 13% to 23%, increasing its lead over competitors such
as Colgate-Palmolive Co. (NYSE: CL), Henkel AG & Co. (OTC ADR: HENOY) and Beiersdorf AG.
Unilever investors sold the deal, valued at 1.7 times the amount of
the Sara Lee business. London-based Unilever PLC's stock fell in Friday
trading, closing down 0.79% at $27.66 a share. Rotterdam-based Unilever
NV's stock closed down 0.71% at $28.14.
For Sara Lee, the deal is the first step towards returning to a
food-only business. The company said it received "significant interest"
for the remainder of its household business – which includes air care,
shoe care, insecticides and non-European cleaning brands – that it
plans to divest.
Sara Lee says the deal is in the best interest of investors.
"The divestiture of body care and European detergents would advance
our strategy to concentrate on our core food and beverage businesses
where we enjoy a strong competitive position and where we can generate
superior shareholder returns," said Brenda Barnes, chairwoman and chief
executive officer at Sara Lee. "We intend to use proceeds from the
divestiture to invest for growth in our core businesses and to
repurchase stock."
Sara Lee wasted no time in buying back some of its shares from
investors. The company authorized a $1 billion share repurchase
program, about 89.2 million shares based on Friday's share price. The
repurchase is in addition to the $150 million, or 13.5 million shares
that were authorized in its last fiscal year.
"This is a pretty extraordinary statement," Sara Lee Chief Executive Officer Brenda Barnes told Bloomberg. "This is a one-time, big buyback." There is no deadline for the buyback, she added.
Shares of Sara Lee gained 6.36% this afternoon, trading at $11.21.
