Unilever sells Ragu sauce to Mizkan in $2.15bn deal
Unilever has said ciao to its Ragu and Bertolli pasta sauce business, agreeing to unload it to Japanese food manufacturer Mizkan Group for about $2.15bn (€1.57bn) as the maker of Dove skin creams continues to shed food brands.
The deal transfers Ragu, the best-selling US pasta sauce that helped popularise Italian food in Ireland, into the hands of a closely held Asian company founded 210 years ago. Together, the brands have annual sales of more than $600m, London- and Rotterdam-based Unilever said.
Under chief executive officer Paul Polman, Unilever has focused on its health and beauty business while selling slower- growth food brands, mainly in the US.
For Mizkan, the deal, its largest ever, enhances its North American exposure, which it has been growing via acquisitions to reduce its reliance on a shrinking population in Japan.
"The deal is the tip of the iceberg of upcoming Japanese food and beverage makers' outbound acquisitions to counter slowing domestic demand," said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo.
The food company, based in Japan's Handa City, makes condiments including mustards and rice wine.
Mizkan unveiled a five-year plan in January, saying it needs to expand overseas as the Japanese population shrinks. The company was founded in 1804 to make vinegar from the leftovers of sake production.
Unilever's food unit, which does not include its tea and ice cream business, accounted for 35pc of sales in 2008. Today, it's 27pc.
"This sale represents one of the final steps in reshaping our portfolio in North America," Unilever said in a statement.
Unilever is still looking to sell its Slim-Fast diet food business, which it put under review along with the pasta brands earlier this year.
Founded in Rochester, New York, in 1937 and acquired by Unilever in 1987, Ragu accounts for about 40pc of Unilever's $1.2bn pasta-sauce sales, according to data tracker Euromonitor International. Sales have declined 18pc since 2009, hurt by the encroachment of private-label sauces, which now account for about one quarter of the market.
Unilever said it expects to conclude the transaction by the end of June.
Part of the proceeds will go to its $1.2bn acquisition of share rights left in family trusts by one of the company's founders nearly a century ago, which simplifies its stock structure, a spokeswoman said.