27 Nov 2021 Unilever divests large chunk of its tea business
Unilever is selling its developed markets tea business for €4.5bn, more than a year after the company launched a strategic review of the unit.
According to some industry pundits, the deal represents ‘an important first step’ in portfolio rationalisation. But are more food divestitures on the cards?
Unilever has entered into an agreement to sell its global tea unit, excluding its tea business in Asia and Lipton JV with PepsiCo, to CVC Capital Partners Fund VIII for €4.5bn on a cash-free, debt-free basis.
The new business, which will be called ekaterra, boasts a portfolio of 34 brands including Lipton, PG Tips, Pukka, T2 and TAZO. It generated revenues of around €2bn in 2020.
The valuation represents 2.4 times sales and 14.5 times EBITDA, coming in above market expectations which largely thought the price would land in the region of 11-12 times EBITDA.
An ‘important step’ in portfolio realignment
Commenting on the deal, Unilever CEO Alan Jope placed it in the context of Unilever’s portfolio evolution towards higher growth brands and categories.
“The evolution of our portfolio into higher growth spaces is an important part of our growth strategy for Unilever. Our decision to sell ekaterra demonstrates further progress in delivering against our plans,” he claimed.
For some time now – since before the 2018 disposal of its spreads business – Unilever management has been talking about the need to weight its portfolio towards higher growth brands and categories.
The company wants to move away from more mature, consolidated and structurally slower growth businesses, instead focusing on areas that technology, R&D and marketing can deliver differentiation.
In the overall context of Unilever’s business – which spans food, refreshments, personal care and homecare – long-running market chatter has concentrated on the possibility of a full-scale exit of food and refreshments to concentrate on beauty and homecare….
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