Unilever in $900m African spreads deal
Unilever has agreed a $900m (€753m) deal with South African investor Remgro, buying Remgro's 26pc stake in its South African subsidiary in exchange for its southern African spreads business and a cash payment.
The deal is the first step in Unilever's broader exit from its shrinking spreads business, a move it promised earlier this year following an unsolicited $143bn takeover offer from Kraft-Heinz.
The Anglo-Dutch consumer goods maker, owner of Dove soap and Ben & Jerry's ice cream, said it would buy Remgro's 25.75pc shareholding in Unilever South Africa in exchange for the spreads business in South Africa, Botswana, Lesotho, Namibia and Swaziland, plus 4.9 billion rand (€310m) in cash.
The deal values the spreads business at 7 billion rand, a multiple of 13.4 times earnings before interest, taxes, depreciation and amortisation. A recession, unemployment of around 27pc and weak growth prospects have constrained consumer spending in Africa's most advanced economy, with Unilever rivals Tiger Brands and AVI reporting slower profit growth.
Unilever's overall spreads business, which includes brands such as Flora and Country Crock, is expected to fetch about £6bn. It has been in decline as consumers eat less bread and margarine, but has strong profit margins.
That makes it attractive for private equity firms, several of which have already been forming bidding consortia, sources said.
Unilever said it planned to distribute financial details about the business to prospective buyers by the end of autumn.
It hopes to clinch a deal by the end of the year, or in early 2018.