Gaining strength

Sept. 25 (Agencies): Consumer goods firm Unilever agreed to pay 1.275 billion euros ($1.87 billion) for Sara Lee’s personal care brands such as Sanex and Radox to reinforce its global lead in deodorants and skin cleansing. Brylcream was also among the brands purchased.

Anglo-Dutch Unilever is buying a business with 85 per cent of its sales in Europe, while Sara Lee will now look to sell its household goods business separately as it launched a $1-billion share buyback programme.

The deal marks the first major acquisition for Unilever’s new chief executive Paul Polman, while Sara Lee’s CEO Brenda Barnes is now half-way through a planned selloff of non-core businesses aimed at focusing the US group on food and drink.

“The Sara Lee brands enjoy strong consumer recognition, offer significant growth potential and are an excellent fit with Unilever’s existing business,” said Polman in a statement.

Unilever says the Sanex, Radox and Duschdas brands will complement its Dove, Axe and Rexona at slightly lower prices and strengthen its European business in key markets such as Britain, the Netherlands, Germany, France, Spain, Italy and Denmark.

Sara Lee said the brands sold accounted for 55 per cent of the profits from its businesses up for sale.

The company said it saw significant interest in its household brands, including Ambi Pur air fresheners, Kiwi shoe polish, Vapona insecticides and its non-European cleaning brands.

“We intend to use proceeds from the divestiture to invest for growth in our core business and to repurchase stock,” Barnes said in a Sara Lee statement.

The US group also reiterated that it intended to maintain its current quarterly dividend of 11 cents for the next four quarters regardless of the timing of disposals. Unilever Plc shares were flat at £17.36 by 1023 GMT in a slightly firmer UK stock market.

Meanwhile, Godrej group chairman Adi Godrej said Unilever’s move would not have any impact on his group’s joint venture with the American firm. Godrej has a joint venture — Godrej Sara Lee Ltd — with Sara Lee. Godrej Industries and Godrej Boyce together hold a 49 per cent stake in the entity. In July, Godrej had announced that it would buy out Sara Lee’s stake from the joint venture.

Credit Suisse analyst Charlie Mills said the price Unilever was paying of 10 times the core operating profit, or EBITDA, was not huge by industry standards which reflected the disparate collection of assets.