Unilever (UL) to Expand Portfolio with Blueair Acquisition
Consumer products giant Unilever Plc UL has been focused on shaping its portfolio to deliver sustainable growth. With an aim to widen its position in home care, Unilever has recently announced the acquisition of Stockholm-based Blueair. However, the terms of the deal were not disclosed.
Founded in 1996 by Bengt Rittri, Blueair is a Swedish maker of indoor air purifying systems for homes and businesses. The company, which reported sales of $106 million last year, is one of the largest manufacturers of premium air purifiers in China, the U.S., Japan, South Korea and India.
Unilever’s acquisition of Blueair is amied to benefit asthma patients as the purifier can remove allergens, thereby making it easier for patients to breathe. The transaction will complement Unilever's water purification business.
Post acquisition, Blueair will continue to operate under the same name in all existing markets, within Unilever's home care division, which accounted for 19% of its 2015 sales.
UNILEVER PLC Price and Consensus
UNILEVER PLC Price and Consensus | UNILEVER PLC Quote
The Anglo-Dutch buyer has been on an acquisition spree since the last few quarters, especially in the home care space. On Aug 10, Unilever completed the purchase of Dollar Shave Club for about $1 billion, in a transaction that was announced in July. Dollar Shave Club is a men's grooming brand and this acquisition could prove particularly lucrative for Unilever, which does not own a direct-to-consumer men’s shaving product line yet.
We note that the company has been relying on deodorants and hair care products to propel revenues this year, amid lagging sales of its margarine and bread spreads. It has also added personal care and other consumer brands, including Dermalogica and Kate Somervile, and the Zest soap brands, last year.
Besides acquisitions, Unilever has also been shedding off assets in its battered food business, as the category has been delivering sluggish growth due to a lack of innovation and declining demand. Demand has been weak due to saturated markets in the U.S. – the company’s major revenue source.
In June, Unilever reportedly reached an agreement with beverage giant Coca-Cola Co. KO and its largest Latin American bottler, Coca-Cola Femsa SAB KOF, to sell the AdeS soy-based beverage business for about $575 million. In Jul 2014, Unilever had sold its Slim-Fast brand to a middle market private equity firm, Kainos Capital, in accordance with its divestiture strategy. The divestiture included the sale of the Slim-Fast trademark and the global Slim-Fast business portfolio. In May 2014, the company completed the sale of the Ragu and Bertolli pasta sauce brands for $2.15 billion.
Apart from these, the company has divested many other brands in the past. In Feb 2014, the company sold its meat snacks business to Berlin-based Jack Link’s Meat Snacks and in January, it spun off the Royal pasta brand to RFM Corporation, one of the biggest diversified food and beverage companies in the Philippines. In 2013, Unilever sold its Soft & Beautiful, TCB and Pro-Line Comb-Thru brands in the hair care category to an international company – Strength of Nature. The company has also divested its Wish-Bone salad dressing business to food company Pinnacle Foods Inc. PF. Moreover, it shed Bertolli and P.F. Chang's frozen meals brands to ConAgra Foods Inc. and its Skippy peanut butter business to Austin, MN-based producer of branded food and meat, Hormel Foods Corporation.
Unilever currently holds a Zacks Rank #3 (Hold).
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