Unilever, the world’s second-biggest consumer goods company, won U.S. approval for its $3.7 billion acquisition of Alberto-Culver Co. (ACV) on the condition it sells the Alberto VO5 brand in the U.S. and divests its Rave brand.
The divestitures are needed to resolve the competitive concerns about the transaction, the antitrust division of the Justice Department said today in an e-mailed statement.
“Without the divestitures required by the department, consumers would have paid higher prices for value shampoo and conditioner and for hairspray sold in retail stores,” Christine Varney, the assistant attorney general in charge of the antitrust division, said in the statement.
Unilever, based in Rotterdam and London, is expanding in home and personal-care products as part of a plan to double its sales. Chief Executive Officer Paul Polman, who joined in 2009 after a career at Nestle SA and Procter & Gamble Co., reached a deal last year to buy Sara Lee Corp.’s body-care operations.
Under terms of the settlement, Unilever can develop the Alberto VO5 brand outside the U.S. and add hair-care brands such as Nexxus and TRESemme to its portfolio of brands, which include Dove, Clear, Suave, TIGI and Sunsilk in hair care and Pond’s and Vaseline in skin care.
“This acquisition is a further step in Unilever’s transformation,” Polman said today in a statement. “The deal enhances Unilever’s presence in attractive, high-growth categories and brings a portfolio of desirable brands that are gaining share.”
The Alberto VO5 brand consists of shampoo, conditioner, hairspray, mousse and other hair styling products. The Rave brand includes hairspray and mousse products.
The transaction as proposed would have reduced competition in the market for shampoo, conditioner and hairspray sold in retail outlets and priced under $2, according to court documents filed by the Justice Department. The transaction would have cut the number of significant competitors in the market segment from three to two, leaving Unilever with approximately 90 percent of those markets, the Justice Department said in its statement.
In the case of hairspray, Unilever’s post-merger share of the market would have been about 46 percent, with the combination resulting in a “highly concentrated” market, the Justice Department said.
‘Disappointed to Sell’
“VO5 was one of the brands that they signaled as being part of the attraction of the deal when they announced it,” Andrew Wood, an analyst at Sanford C. Bernstein in New York, said today in a phone interview. “I’m sure they’ll be disappointed to sell it.”
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Written comments may be submitted within 60 days, after which time the proposed settlement must be approved by a judge.
Unilever, the second-largest consumer-goods maker after Procter & Gamble, won European Union approval in November to buy Sara Lee’s shower-gel and European detergents business after it agreed to dispose of the Sanex deodorant and body-wash brand in the region.
Unilever rose 48 cents, or 2.2 percent, to 22.68 euros in Amsterdam trading, valuing the company at 68.6 billion euros ($99 billion). The shares have risen 3.2 percent since the company agreed to buy Alberto-Culver.