Unilever Selling Spreads Business for $8 Billion to KKR

Unilever will sell is spreads and margarine business for €6.83 billion or $8.04 billion to U.S. based KKR a private equity firm. Unilever said the sale would allow it to concentrate on products that are faster growing.

The maker of Dove soap and Knorr soup announced this deal Friday just hours after a report said that KKR entered into talks to purchase the business after it had outbid its rivals.

The brands sold will include Flora, Becel, Blue Band and Country Crock. Unilever put this business up for sale during April, following the review of assets it has that was prompted by the unsolicited February takeover attempt of $143 billion by Kraft Heinz.

Today’s announcement is another step further in the sharpening and reshaping of the company portfolio for growth over the long term, said CEO Paul Polman. He added that it will help the momentum the company has achieved from the market’s leading brands.

The spreads business has seen a decline for several years due to people eating less bread as well as margarine, but the company took steps to stem that decline and has made the unit quite profitable.

Because of that, the unit was very attractive to different private equity firms who happened to be the majority of bidders in an auction held by Morgan Stanley and Goldman Sachs.

KKR, based in New York, had assets of $153 billion under its management as of September 30. The company has a very long history within the consumer sector and has investments in Coffee Day Resorts in India and Qingdao Haier a white goods maker in China. Earlier in 2017, KKR acquired a majority stake in Nature’s Bounty the maker of vitamins.

The deal reached with Unilever should close by the middle of 2018, subject to approvals by regulators and employee consultations.

Unilever, who saw an unexpected slowdown in sales during October, said it is planning to return cash to shareholders, unless more acquisitions come up that are value creating.

In 2017, Unilever has acquired small brands that include Sundial Brands, Carver Korea and Tazo tea.

Last month the foods business said it favored ending its Anglo-Dutch dual structure to become just one entity, but a final decision on that has been delayed while it decides if it would be based in the Netherlands or Britain.

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