UPDATE: Colgate To Buy Unilever's Sanex, Sell Columbian Laundry Operations
23 März 2011 - 1:24PM
Dow Jones News
Colgate-Palmolive Co. (CL) Wednesday agreed to buy the Sanex
personal care brand from Unilever PLC (UL, ULVR.LN) for EUR672
million ($940 million), strengthening its personal-care business in
Europe.
As part of the deal, the world's largest toothpaste maker by
sales and market share also agreed to sell Unilever its laundry
detergent business in Colombia for $215 million. Latin America is
Colgate's biggest market by sales.
Colgate said the move is in line with its focus on its
higher-margin oral care, personal care and pet nutrition
businesses. The company is wrestling with a recent spike in
commodity costs worldwide that is putting pressure on a number of
industries.
Consumer-product companies, facing weak demand in the U.S. and
other developed markets, are being put in the tough position of
raising prices to offset costs.
Unilever, meanwhile, was required to dispose of the deodorant
and bathcare products business in order to get European Commission
clearance of its EUR1.28 billion purchase of Sara Lee Corp.'s (SLE)
personal care unit.
Sanex's personal care products, such as shower gels and
deodorants, accounted for about 20% of the U.S.-based group's
sales. Sanex had net sales of EUR187 million in 2010, primarily in
Western Europe.
Colgate said it expects the two deals to increase its earnings
by about 4% this year, due to a one-time gain on the detergent
business. It sees the transactions boosting its profit about 1% in
2012 on growth and efficiencies from Sanex.
"We are pleased to be divesting Sanex in what we consider to be
a very attractive deal for Unilever," Michael Polk, Unilever's
president of categories said in a statement.
Polk said the simultaneous purchase of Colgate's laundry brands
in Colombia, which include Fab, Lavomatic and Vel, will
"significantly enhance our position in one of the larger detergents
markets in Latin America, bringing critical mass to our Colombian
business."
Both transactions are subject to regulatory approval.
Last month, Unilever posted a jump in profits driven by sales
and volume gains in emerging markets, but also warned that mature
economies remain sluggish and escalating commodity prices are
putting pressure on margins.
The Anglo-Dutch maker of Ben & Jerry's ice cream, Knorr soup
and Bertolli olive oil spreads and household products such as Dove,
Lynx and Cif is stepping up its investment in the face of
intensified competition to build its brands in developing
economies, where it records over 50% of its revenues, such as Asia,
Africa, Latin America and the Middle East.
Still, the company--which sells goods in 170 countries and
competes with U.S.-based market leader Procter & Gamble Co.
(PG) and Switzerland's Nestle SA (NESN.VX)--is facing rising
commodity costs and a challenging consumer outlook in its developed
markets, where discretionary income is under pressure from
austerity measures such as tax hikes and public spending cuts as
governments rein in borrowing.
The group targets profitable volume growth ahead of its markets,
steady and sustainable underlying operating margin improvement and
strong cash flow.
At 1130 GMT, Unilever shares were up 14 pence, or 0.8%, at 1824
pence, in a higher London market. Colgate shares closed Tuesday at
$78.43 and were inactive premarket.
By Matt Jarzemsky and Simon Zekaria, Dow Jones Newswires; +44
207 842-9410; simon.zekaria@dowjones.com
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