The analysts speculate that any such deal would be used to fund a large acquisition in its home and personal care businesses, according to a Liberum Capital report, which underlines why now is the right time to buy Unilever stock.
Authors Pablo Zuanic and Lisa Hau said: “We expect Unilever at some point to implement a large accretive acquisition in the HPC (household and personal care) space and to partly fund it by selling it’s the Food unit (excluding ice cream and beverages) which we estimate can be sold at about one times sales (or €14bn).
“Selling this lower growth component would improve the company’s growth profile but at the same time, a deal in HPC would likely increase the company’s franchise strength in the category (potential targets: parts of Clorox; Colgate; Beiersdorf; and or a cosmetics company).”
Unilever was contacted about the report but a spokesman said that they would not comment on speculation.
Re-thinking the business structure?
Unilever’s business units are broken down into four categories: Home Care; Personal Care; Savoury, Dressings & Spreads; and Ice Cream and Beverages. Its food brands include Knorr, Flora, Magnum and Lipton.
Unilever is due to announce its half year results on Thursday. However, in its trading statement for Q1, published in April, it stated that all the sub-categories within savoury, dressings and spreads delivered sales growth on the back of strong innovations and increasing price.
But rising commodity costs, especially in spreads, required higher pricing which led to negative volumes in the quarter.
Underlying sales growth for the category was 2.1%, with volume slightly negative at minus 0.4%.
Growth in the personal care races ahead
Conversely growth in the personal care category has been streaking ahead in recent quarters, and has been driven further by a spate of recent acquisitions.
In December it completed its acquisition of the Sara Lee Personal Care business for €1.275bn.
Then in May Unilever acquired the beauty and personal care company, Alberto Culver, for $3.7bn (or €2.6bn at current exchange rates).
Personal care is by far the biggest category in the business, and in the first quarter of the year it delivered sales revenues of £3.52bn, representing underlying sales growth of 5.3 per cent and volume growth of 3.9 per cent.
In the home care category, first quarter growth outshone even the personal care category, with underlying sales growth tipping 6.0 per cent to reach £2.01bn and volume growth coming in at 4.6 per cent.