Colgate-Palmolive Co. (CL) agreed to buy Unilever’s Sanex personal-care unit for about $940 million, pursuing its biggest purchase in more than a decade to expand in deodorant and body wash overseas.
Colgate also will sell its Colombian laundry detergent business to Unilever for $215 million, according to a statement from the New York-based company today. Sanex, which Unilever had to sell to allay European Union competition concerns, generated sales of about $260 million last year.
The acquisition is Colgate’s first since 2006 as Chief Executive Officer Ian Cook aims to expand into more profitable products. Colgate, which generates more than 80 percent of sales outside North America, will gain a foothold in key parts of the personal-care market in Western Europe as a result of the transaction, he said.
Unilever’s disposal of Sanex “looks like a decent deal to me,” Martin Deboo, an analyst at Investec in London, said today. “They sold it for more than three times sales, which I think for a forced sale has got to be a good multiple.”
The past five years have yielded 275 deals for personal- care companies globally. The buyers in 25 of those deals paid a median of about 1.1 times their targets’ sales over that period, according to data compiled by Bloomberg. Colgate paid about $1 billion for Latin American toothpaste maker Kolynos Oral Care in 1995.
Unilever shares rose 1.6 percent to 21.66 euros in Amsterdam. Colgate fell 14 cents to $78.29 at 4:01 p.m. in New York Stock Exchange composite trading.
Unilever, which bought Sanex as part of its 1.2 billion euro ($1.7 billion) acquisition of Sara Lee Corp. (SLE)’s international toiletries unit, was forced to dispose of the brand by the European Union, which raised concerns about competition issues in Europe. Combining Sanex with the company’s Dove and Rexona brands would “likely have led to price increases” in seven countries including the U.K. and Spain, according to the European Commission.
Sanex also drew interest from Procter & Gamble Co. and Henkel AG, people briefed on the discussions said this month. Unilever didn’t want to sell the business, because Sanex was the brand it wanted most, according to the people.
Unilever, under the leadership of CEO Paul Polman, aims to double sales through expansion into faster-growing developing markets and health and personal-care products. The London and Rotterdam-based company is acquiring Alberto Culver Co., adding hair-care products including Nexxus and TRESemme, for $3.7 billion in cash, its biggest deal in a decade.
Colgate will pay all cash for the shares and net assets and expects to close the acquisition by the end of the second quarter.
“We like these moves,” Connie Maneaty, an analyst at BMO Capital Markets, wrote in a note today. “We are also pleased that CL is expanding its portfolio of brands, a move that we believe will increase its competitive strength.” New York-based Maneaty rates the shares “market perform.”