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Unilever to Buy Alberto Culver for $3.7 Billion

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Unilever Agrees to Buy Alberto Culver for $3.7 Billion
Dove shampoo, produced by Unilever Plc. Photographer: Chris Ratcliffe/Bloomberg

(Corrects source of share purchase price in second paragraph.)

Sept. 27 (Bloomberg) -- Unilever, the maker of Dove soap, agreed to buy Alberto Culver Co. for $3.7 billion in cash to add VO5 and Nexxus hair-care products in the company’s biggest purchase in a decade.

Unilever will pay $37.50 a share for the Melrose Park, Illinois-based business, Alberto Culver said in a statement today. That’s about 19 percent more than the closing price on Sept. 24. The purchase will add to earnings per share in its first year, according to a statement from Unilever.

“It’s a sensible deal, has good strategic rationale and is positive, but it’s not transformational -- it’s a bolt-on deal like the Sara Lee one,” said Martin Deboo, an analyst at Investec Securities in London.

Chief Executive Officer Paul Polman is expanding in home and personal-care products as part of a plan to double total sales. Unilever spent much of the decade after buying Bestfoods in 2000 shedding brands. Polman, the first outsider to lead the company in its history, agreed to buy Sara Lee Corp.’s body-care operations last year.

Shares of Unilever rose as much as 2 percent to 22.28 euros a share in Amsterdam and traded at 22.27 euros a share as of 9:38 a.m. The stock has lost 2.1 percent this year.

Multiple

Alberto Culver had sales of $1.6 billion and earnings before interest, taxes, depreciation and amortization of $250 million for the 12-month period ended June 30. Unilever offered to pay 1.7 times annual revenue for the Sara Lee business.

“It’s a reasonable multiple for a bolt-on deal of this size,” Deboo added.

The purchase makes London- and Rotterdam-based Unilever the biggest maker of hair conditioning products in the world and the second-largest in shampoo, it said today. It will be the third-largest in styling. Unilever entered the professional hair product market in 2009 with the purchase of the TIGI salon brands from the creators of Toni & Guy for $411.5 million.

Unilever is aiming to expand outside of western Europe, the only region where its sales fell in the first half, amid sluggish consumer spending. Alberto Culver made about 64 percent of its sales in the United States in the year ended September, 2009, according to Bloomberg data.

Divestments

The maker of Knorr soups on Sept. 24 agreed to sell its consumer tomato products business in Brazil to Cargill Inc. for about 260 million euros ($350 million). The company sold its Italian frozen-foods unit in July for about 805 million euros.

Unilever was advised by Morgan Stanley, said Paul Matthews, a company spokesman. BDT & Company was Alberto Culver’s financial adviser, while Credit Suisse Securities LLC provided a fairness opinion, the company said in a statement.

To contact the reporter on this story: Clementine Fletcher in London cfletcher5@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net.

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