Unilever Targets $7.44bn From Sale Of Food Brands

British newspapers reported on Saturday that Anglo-Dutch giant- Unilever is preparing to sell some of its food brands like Flora margarine and Stork butter brands for £6 billion ($7.44bn), but did not cite sources.
While expectations are that Unilever’s Nigerian subsidiary would presents its audited 2016 financials in the coming days and weeks, the nine-month performance score card shows that the food products division was the biggest contributor, accounting for N26.148bn or 52.43% (N9.283bn or 52.76% of its N17.593bn sales revenue for the three-month period ended Sept 2016), more than double the N12.703bn or 25.74% from the personal care division. The home care division contributed N11.019bn or 22.09% to the revenue.
The food division also contributed N1.642bn or 52.43%, the bulk of the company’s N3.131bn; followed also by personal care with N797.773m or 25.47%; and 22.09% from the home care segment.
This therefore means that the planned sale of the Unilever food products, if extended to Nigeria, could prove suicidal for a company still struggling to ensure sizeable market for most of its product range.
According to The Times and Sunday Times of London last week, the brands being offered for sale “could be offloaded as Paul Polman, chief executive of Unilever, prepares to address City concerns raised after Kraft Heinz’s withdrawn $143 billion offer that the company has not focused enough on investor returns.
“Next month Unilever will publish a strategic review with expectations growing that several underperforming businesses could be sold in a £6 billion auction as Mr Polman looks to clear the decks and pave the way for larger payouts to shareholders.
The Sunday Telegraph said unnamed parties were preparing to buy the brands, weeks after the maker of Hellmann’s mayonnaise, Ben & Jerry’s ice cream, and Dove toiletries rebuffed a surprise $143 billion takeover offer from U.S giant- Kraft Heinz last month at $50 per share, represented an 18% premium on the company’s value.
Unilever also owns an array of other brands ranging from food and beverages (including Becel and Lipton tea) to home and personal care (including Vaseline and Axe).
But Unilever said the offer undervalued it, declining a merger that would have given birth to one of the largest in history.
The company has launched a business review to consider returning cash to shareholders, making medium-sized acquisitions and more aggressive cost cuts, the Financial Times reported.

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