The sale of the Sara Lee brand allays competition concerns over the deal, the European Commission said in a statement today. The EU ruling led the companies to reduce the purchase price for the unit to 1.21 billion euros ($1.63 billion) from 1.28 billion euros, Sara Lee said.
Selling Sanex is “is a major disappointment for the company, as Sanex was seen by Unilever as an attractive brand positioned just below some of its key global brands,” said Richard Withagen, an analyst at SNS Securities in Amsterdam. Unilever should be able to sell it for about 300 million euros, he said. He rates Unilever “accumulate.”
Unilever, the world’s second-largest consumer-goods maker, sought to buy the competing Sara Lee lines to further focus on international brands. Combining the Sanex brand with Unilever’s Dove and Rexona would “likely have led to price increases” in seven countries, including the U.K. and Spain, by removing the company’s main rival, according to the European Commission.
“We had to ensure that the transaction would not lead to increased prices for consumers,” EU Competition Commissioner Joaquin Almunia said in a statement. “As Unilever offered a strong and clear-cut remedy to address the competition concerns in a number of deodorant markets, the commission was able to clear the merger.”
Sara Lee Brands
The Sara Lee brands had sales of more than 750 million euros for the 12 months ended June 2009, according to Unilever. Sanex sales contributed 168 million euros for the same period.
Unilever shares rose 21 cents, or 1 percent, to 22.24 euros in Amsterdam trading.
EU approval allows Unilever to add other important Sara Lee brands such as Radox and Duschdas to the “key growth category” of home and personal care, Doug Baillie, Unilever’s president for western Europe, said in a statement today.
Sara Lee Chief Executive Officer Marcel Smits said he expects the deal to close in December. The reduced price Unilever is paying for the unit has “no effect” on Sara Lee’s plans to repurchase $2.5 billion to $3 billion of shares by the end of the fiscal year 2012, he said in a statement.
The deal is part of Sara Lee’s sale of its global household and body-care business. The EU is also reviewing the sale of Downers Grove, Illinois-based Sara Lee’s insecticide division to S.C. Johnson & Son Inc. Almunia said he expected to rule on that deal before Christmas.
Unilever CEO Paul Polman last year broke the company’s nine-year streak of avoiding major takeovers with the Sara Lee purchase, which includes more than 90 brands in 19 European countries.
Syngenta AG, the world’s biggest maker of agricultural chemicals, also won EU approval today to buy Monsanto Co.’s hybrid sunflower-seed business, Almunia said. Syngenta agreed to sell Monsanto units in Spain and Hungary to settle competition concerns.
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