Sara Lee and Unilever in

123jump.com Staff
25 Sep, 2009
New York City

Unilever agrees to acquire Sara Lee personal care business in Europe for

[R]10:30 AM New York, 3:30 PM London – Unilever agrees to acquire Sara Lee personal care business in Europe for €1.25 billion in cash. The purchase will increase the consumer goods company’s reach in mid-price products in Europe that generate higher margins but are stagnant.[/R]

The household and consumer products maker Unilever agreed to acquire personal care business of Sara Lee Corp for 1.275 billion in cash. The business includes global body care and European detergents businesses.

Unilever has agreed to pay cash for the purchase.

The businesses in 2009 generated €750 million or $1 billion in sales and generated earnings before interest and taxes of €128 million. The rest of the household and personal care business that generated $1 billion includes the Ambi Pur brand, Kiwi shoe care, Ridsect insecticides and White King bleach brands.

The businesses include several well known brands Duschdas, Sanex and Radox.

Unilever for the last three years has been on the defensive as it focused on cost cutting and selling businesses that were weak. The Sara Lee purchase is the largest purchase of Unilever since Paul Polman took over at Unilever.

Polman prefers to have a broad spectrum of brands at different price points as consumers in Europe struggle with weak economy and rising job losses. Polman has recently increased advertising and promotions and focused on emerging markets.

Sara Lee acquisition is the largest since Unilever acquired Slim.Fast Foods and Ben & Jerry’s in the U.S. and Amora-Maille culinary businesses in 2000. In the year the company also acquired Bestfoods, which has been the second largest cash acquisition in the company’s history for $21.3 billion.

In New York trading Sara Lee ((SLE)) increased 61 cents to $11.15 and Unilever ((UL)) added 0.04% to $27.89. In Holland and London trading Unilever edged lower.

For the last three years Sara Lee has been focusing on its coffee and food businesses and divesting as it calls non-core businesses. Brenda C Barnes, chairman and chief executive appointed since 2005 has been divesting many of these non-core businesses.

Of the six business units at Sara Lee, international home and body care business had second highest profit margin and slowest sales growth according to company presentation to analysts. The business unit has flat sales in 2009 and generated 10% adjusted operating margin.

Brenda C. Barnes, chairman and chief executive officer, Sara Lee Corp. “We intend to use proceeds from the divestiture to invest for growth in our core businesses and to repurchase stock.”

Sara Lee recently sold its sauces and dressing businesses and certain coffee units that generated $300 million in sales. The company also sold off Hanesbrands.

Sara Lee also announced that its board has announced $1 billion share repurchase program in addition to 13.5 million shares authorization available in the prior program.

Sara Lee employs 41,000 people and generated sale of $12.8 billion in fiscal 2009 and food services and fresh bakery sales comprise 60% of total sales.