More reports on: Foods / beverages

Platinum Equity to bid for part of Unilever's margarine and spreads business

06 December 2017

US private equity investment firm Platinum Equity is preparing a bid for part of Unilever's margarine and spreads business, Reuters reported, citing sources familiar with the matter said.

Unilever had in April said that it is selling its spreads business, which includes brands like Flora and Stork butter, in a bid to attract greater returns for shareholders and become more focused.

The move came two months after Kraft-Heinz made a surprise takeover bid for Unilever.

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.

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."

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."

But the takeover bid had unnerved Unilever, and CEO 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.

Commenting on putting the Spreads business for sale after a strategic review, Paul Polman said that the ''faster pace of change'' that is occurring in the market is challenging Unilever ''to set the bar higher'' and the ''future of the spreads business now lies outside the group.''

The Anglo-Dutch consumer products giant had hired Morgan Stanley and Goldman Sachs to assist in the sale that may fetch more than $7 billion (5.3billion), according to analysts.

Morgan Stanley and Goldman Sachs have asked bidders to submit final bids by 11 December as the consumer giant wants to clinch a deal before the end of 2017, the report said.

Los Angeles-based Platinum wants the portion of Unilever's spreads business that covers developed markets such as Europe and the US rather than the whole unit which includes emerging markets, the report added.

Bloomberg had in October reported that Unilever has received offers from bidders including a consortium of Bain Capital and Clayton Dubilier & Rice, while a group comprising of Blackstone Group and CVC Capital Partners also made an offer and buyout firm Apollo Global Management has placed a bid alone.

US agricultural-trading giant Archer-Daniels-Midland Co had earlier said that it was not bidding after the Sunday Times reported that the Chicago-based company could team up with a private equity to bid for some of the operations. 

Bain Capital and Clayton Dubilier & Rice is expected to move to the second round of bidding along with private equity firms KKR and Apollo, Reuters had earlier reported.

Unilever plan to sell its underperforming margarine and spreads business has been rumored for years, after it made the spreads unit into a separate accounting structure and management team.

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