Consumer products giant Unilever Inc. (UL) entered into a definitive agreement to acquire US-based hair-products company Alberto Culver for US$3.7 billion in cash. The acquisition is expected to enhance Unilever’s presence in the high-growth personal care category. Personal care is a strategic category for Unilever and in fiscal 2009; it represented 31% of the company’s total turnover.
Alberto Culver’s successful brands such as TRESemmé, Nexxus, VO5 and Simple compliment Unilever’s portfolio of brands like Suave, Dove and Sunsilk to cover more price points at attractive categories. In addition, this acquisition will make Unilever the leading company in hair conditioning, the second largest in shampoo and the third largest in styling.
Alberto Culver generated sales of approximately $1.6 billion and has operations in nine countries, including the US, Canada, Argentina, Mexico, the UK, South Africa, Australia and Asia. Therefore, the acquisition will expand Unilever’s presence its hair care category in these countries, all of which are expected to be significant hair care markets in the years to come.
However, the acquisition is subject to regulatory approval and approval of the Alberto Culver shareholders. Management at Unilever expects the Alberto Culver’s acquisition to deliver significant synergies be accretive to the company’s earnings in the very first year.
Unilever is a leading global manufacturer of consumer products and possesses a formidable portfolio of well-established brands. We currently maintain a long-term Neutral recommendation on Unilever as we anticipate it to perform in line with the broader market.
UNILEVER PLC (UL): Free Stock Analysis Report
Zacks Investment Research
