Unilever to buy US hair care business Alberto Culver for $3.7b

Consumer goods group Unilever Plc/NV will buy U.S. hair and skin care company Alberto Culver for $3.7 billion (£2.34 billion) in the latest move to rebalance its portfolio towards higher growth product lines. Skip related content

Unilever’s biggest acquisition in a decade will add brands such as V05, TRESemme and Nexxus to Unilever’s existing Dove and Sunsilk, and make it the world’s leading company in hair conditioning and the second largest in shampoo.

Analysts said the price of the deal looked high but could be justified by as-yet unspecified cost savings and by skewing Unilever’s business to more high-growth, high-margin categories compared to its other food and detergent businesses.

The acquisition follows a yet-to-be completed deal to buy Sara Lee’s bodycare division for $1.3 billion and will also mark Unilever’s biggest acquisition since its massive $24.3 billion Bestfoods deal in 2000.

“The initial consideration for Alberto Culver of 14.8 times EBITDA (earnings before interest, tax, depreciation and amortisation) on the face of it looks quite punchy, but we believe ‘significant’ but as yet undisclosed synergies will make the price look more reasonable,” said analyst Graham Jones at brokers Panmure Gordon.

Alberto Culver shares closed up 19.6 percent at $37.64 on the New York Stock Exchange on Monday.

The takeover deal values Alberto shares at $37.50 each in cash, or a 19 percent premium to Friday’s close of $31.48. The merger agreement would require any party that cancels the deal to pay the other $125 million, according to a regulatory filing.

Unilever Plc finished up 1.3 percent to 1,816 pence in London and the FTSE All Share index closed down 0.3 percent, as other analysts said the deal would give Unilever greater hair care sales in the United States where it has struggled in recent years.
Source: Reuters