Unilever washes out US laundry products biz
Anglo-Dutch personal and home care giant Unilever announced it would sell its US detergent and laundry products business to equity company Vestar Capital Partners. The price is $1.45. The brands involve include such standbys as All. Surf, Snuggle, and Wisk.
The move is part of a long campaign by Unilever to simplify its product liens and cut out slow-growing lines of business, in the face of a 25% stock decline over the year. While it has chopped away in previous years, it has pledged a total of over $3 billion in sell-offs this year. (Just recently, the company sold off some olive oil brand Bertolli in Europe this month.) Unilever will keep selling detergent outside the US. Especially, Unilever is working in India and other emerging companies, where sales are growing fast.
According to an article in The Financial Times ('Unilever hangs on to European laundry list," 7/28/08)
Unilever has strong positions in emerging markets, controlling about 70 per cent of the laundry market in Brazil, 80 per cent in Argentina, 80 per cent in South Africa and 40 per cent in India. About two-thirds of its laundry sales now come from emerging markets.
We don't usually cover equity investments, but this is a little different. Among the 65 companies it has investments in, ranging from Birds Eye Food to Solo Cup Company, it also owns Huish, a US company that is the #1 maker of store-brand detergents in the US, as well as selling its own discount detergent under the Sun brand. Because of this, the acquisition begins more to look like a strategic move, building a detergent giant in the US to compete with #1 Procter & Gamble.
For Unilever and companies like it, hallowed brands that don't perform are simply ballast to be unloaded as quick as possible, even while it adds new brands and SKUs a at any amazing rate in growth areas.
