Unilever prepares to sell Flora, Bertolli and Stork brands for around £6 bn

20 Mar 2017

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Anglo-Dutch consumer products giant Unilever Plc is preparing to sell some of its most iconic brands after rejecting an unsolicited $143-billion takeover bid from Kraft Heinz, the Sunday Times reported yesterday.

Unilever, which is already preparing a strategic review after the surprise raid from Kraft Heinz, is planning to sell its "spreads" business, which includes Flora, Bertolli and Stork brands, the report said.

The sale may fetch the London-based company around £6 billion, and private equity firms Bain Capital, CVC and Clayton Dubilier and Rice have started working on offers the report added.

Kraft Heinz may also emerge as a possible buyer for the "spreads" business, which generates £480 million in earnings or 4 per cent of Unilever's entire revenue, according to several British newspaper reports.

Unilever is expected will announce next month the results of its strategic review, which includes raising up to $15 billion in order to return cash to shareholders, embarking on medium-sized acquisitions, cost cuts and giving a one-off special dividend.

This move would allay the concerns of shareholders who wanted Unilever to consider Kraft's bid.

Last month, Kraft Heinz, the US food conglomerate backed by investor Warren Buffett and private equity firm 3G Capital, had offered to buy Unilever for $50 a share through a mix of cash and stock, which valued the maker of Knorr soups, Dove soap and Ben & Jerry's ice cream at more than $140 billion, a premium of nearly 20 per cent to Unilever's 16 February closing price.

Unilever immediately rejected the offer by saying that Kraft Heinz's offer fundamentally undervalued the company, and added that it "sees no merit, either financial or strategic, for Unilever's shareholders. Unilever does not see the basis for any further discussions."

Two days after the rejection, Kraft Heinz withdrew its offer and said that it, "had amicably agreed to withdraw its proposal for a combination of the two companies."

Even though Kraft Heinz's offer had been unsolicited and could have set up a fight for control of Unilever, the statement dripped with pleasantries and assurances of mutual respect.

But the takeover bid had unnerved Unilever and the CEO of Paul Polman urged the British government to make changes to the takeover codes on corporate deals in order to protect iconic British companies from falling to the hands of overseas corporate raiders.

A takeover of Unilever would be one of the largest in corporate history. It would be the biggest in the food and beverage business, beating the nearly $125-billion merger between beer giants Anheuser-Busch InBev and SABMiller last year (See: AB InBev raises SABMiller bid as investors worry over UK pound's fall).

If the two companies were to merge, the deal would combine the company famous for Kraft macaroni and cheese and Heinz ketchup with the firm that owns the Dove brand of personal care products.

Unilever has been busy making deals of its own. The company bought Dollar Shave Club for $1 billion last year, then bought eco-friendly diaper and laundry detergent maker Seventh Generation.

There has also been speculation that Unilever was interested in acquiring Honest Co, the personal care products startup backed by actress Jessica Alba.

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