The deal, which the Anglo-Dutch FMCG giant foreshadowed in April, will see the Becel, Flora, Country Crock, Blue Band, I Can’t Believe It’s Not Butter, Rama and ProActiv brands move outside of the Unilever stable, freeing up resources for another acquisition or handing proceeds to shareholders.
Unilever’s spread business generated €680 million (1.18 billion) in earnings before interest, tax, depreciation and amortization last year, but has been struggling as consumers turn back to butter after several years of growth in spreads.
Unilever CEO Paul Polman said the deal is the next step in the UK-listed company’s bid to “reshape and sharpen” its portfolio for long-term growth.”
“In April of this year we set out our 2020 programme to accelerate sustainable value creation. After a long history in Unilever we decided that the future of the Spreads business would lie outside the Group,” Polman said.
“The consideration recognises the market leading brands and the improved momentum we have achieved. I am confident that under KKR’s ownership, the Spreads business with its iconic brands will be able to fulfil its full potential as well as societal responsibilities.”
Last week Unilever paid an undisclosed amount for personal care company Schmidt’s Naturals, one of a string of recent acquisitions intended at re-positioning the global strategy of the business following a failed take-over offer from Kraft-Heinz earlier this year.
KKR’s EMEA regional boss Johannes Huth said: “The strength of the portfolio of consumer brands in Spreads provides a firm foundation for future growth. We look forward to deploying our global network and operational expertise to support the business’s growth ambitions, while continuing to follow Unilever’s responsible sourcing policies, including working towards the goal of sourcing 100 per cent sustainable palm oil by 2019.”
The investment is funded by KKR’s European and N. American private equity funds. The offer is subject to certain regulatory approvals and employee consultation in certain jurisdictions. Completion is expected mid-2018. Unilever said they intend to return the net cash realised to shareholders, unless more value-creating acquisition alternatives arise. The transaction constitutes a class 2 transaction for the purposes of the UK Listing Rules.
Unilever’s CEO of Spreads, Nicolas Liabeuf, will continue to lead the business from KKR.
“There is a positive momentum in the performance of the Spreads business and we are excited about continuing this journey with KKR. We are confident that our business and the entrepreneurial spirit of our people will thrive further under new ownership,” said Liabeuf.