Unilever to Buy Personal Care Business of Sara Lee

Unilever to Buy Personal Care Business of Sara Lee

Unilever said Friday that it will acquire personal-care brands from Sara Lee Corp. in a €1.28 billion (about $1.9 billion) deal, cementing its grip on the deodorant and skin-cleansing market.

The acquisition, the Anglo-Dutch company's first since its Chief Executive Paul Polman took the reins in January, adds the Sanex, Radox and Duschdas brands, among others, to Unilever's stable of products including Dove, Axe and Rexona. It also produces Ben & Jerry's ice cream, Dove soap, Lipton teas and Hellmann's mayo.

Mr. Polman said in a statement that the Sara Lee brands "enjoy strong consumer recognition, offer significant growth potential and are an excellent fit with Unilever's existing business."

Unilever said the deal will strengthen its operations in Western Europe and Asia and added it sees "significant potential" in building the newly acquired brands in developing and emerging markets. A Unilever spokesman said the Sara Lee brands have solid market share in France, Germany, the Netherlands, the U.K. and Denmark.

The Sara Lee brands generated annual sales of more than €750 million and earnings before interest, tax, depreciation and amortization of €128 million for the year ended June 30.

Investec Securities analyst Martin Deboo said Unilever's deal looks strategically sensible because it plugs gaps in the company's portfolio at a good price.

A Unilever spokeswoman said 85% of the personal-care brands acquired offer a "perfect strategic" fit with its existing brands. "We may in the future sell some of the smaller acquired brands, but this is something that we will look at later," she said.

ING Wholesale Banking analyst Marco Gulpers forecasts annual synergies from the deal of €50 million and expects the personal-care business to lift Unilever sales in Western Europe by 5%, giving the Anglo-Dutch company a leading position in Western Europe.

Unilever said it is too early to comment on synergies and whether any factories would be closed or jobs lost.

The deal is subject to regulatory approval and consultation with European employee works councils, which is expected to take a "number of months," the Unilever spokesman said.

Separately, Sara Lee Chief Executive Brenda Barnes said Friday that selling the brands, about half of its household and body-care business, to Unilever "will have an impact" on the Downers Grover, Ill., company's tax rate in the future. But a lot of the affect on the Sara Lee's tax rate would be "driven by use of proceeds," she said.

The company also said that the board of directors authorized a plan to repurchase about $1 billion of Sara Lee shares.

The deal, which is expected to be completed next year, would have a tax rate of about 15%, Ms. Barnes said. Investors should have "no fear of us doing something that's not the right answer" and not in shareholders' best interest, she added.

Sara Lee also said it has received "significant interest" in the remainder of its household business and is continuing to pursue sale options for the unit, which includes air care, shoe care, insecticides and non-European cleaning brands.

Sara Lee announced in April said it was exploring options for its international household and body-care business, including a possible sale, after receiving interest in the division. In August, it said it was continuing to consider "all alternatives" for the segment, including a divestiture. The company has been restructuring since 2005, spinning off or selling slower-growth businesses.