Anglo-Dutch consumer goods giant Unilever PLC (ULVR.LN) could be forced to sell some businesses after the European Commission raised concerns about its proposed EUR1.28 billion acquisition of Sara Lee Corp.'s (SLE) personal care unit.

Unilever said Thursday it has received a statement of objections from the commission, Europe's highest antitrust authority, over the deal. However, a company spokesman said it remains "confident that a positive agreement can be concluded in the fourth quarter of 2010."

Unilever, which makes Ben & Jerry's ice cream, Dove soap and Cif household cleaner, wouldn't disclose the contents of the statement of objections, the spokesman said.

The commission wasn't immediately available to comment on the probe.

The commission has blocked only two mergers in the last six years: Ryanair Holdings PLC's (RYAAY) bid for Ireland's Aer Lingus Group PLC (EIL1.DB) and a tie-up in the Portuguese electricity market, and is overall regarded by Brussels lawyers as reluctant to stop deals without very significant reasons.

Oracle Corp's (ORCL) $7.4 billion bid for Sun Microsystems was initially resisted by the commission, which sent out a statement of objections stating the deal would be bad for competition in the database sector, but in the end the regulator was forced to clear the deal without remedies in early 2010.

One London-based analyst, who didn't want to be identified, said the commission's objections to the Sara Lee deal could result in some small divestments to alleviate antitrust concerns, but the news shouldn't impact the stock greatly, with investors focused on the group's second-half margins and resistance to both input costs and inflation.

Shore Capital analyst Clive Black said he remained confident the deal would go ahead, noting the company still expects it to close in the fourth quarter.

At 1542 GMT, Unilever's shares were down 42 pence, or 2.4%, at 1699 pence in a sharply lower London market.

The commission launched an in-depth inquiry into the proposed acquisition in June after an initial market inquiry revealed potential antitrust concerns on a number of products including deodorants and fabric care.

It isn't unusual for the commission to send out formal antitrust charges once a probe has been pushed to the in-depth phase. The charge sheet gives the company an opportunity to know exactly where the problems lie, allowing it to address the issues before the commission takes its final decision.

The current deadline for the commission to clear or block the deal by has been set for Oct. 5, but it is likely to get extended due to divestments offered in problem areas.

Unilever hopes the EUR1.28 billion cash deal, announced last September, will strengthen its operations in Western Europe and Asia, adding Brylcreem and Radox to its portfolio.

It is the first major deal since Chief Executive Paul Polman took the reins in January 2009.

-By Lilly Vitorovich and Peppi Kiviniemi, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com

(Simon Zekaria contributed to this article.)
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