Unilever sells US license for VO5 brand to Brynwood Partners
The divesture is a legal requirement relating to international monopoly laws after Unilever acquired the Alberto Culver Company in a deal that was completed in May of this year at a cost of €3.7bn ($5.4bn).
The move builds on the completion of the company's acquisition of the Sara Lee Personal Care business, which was given the go ahead back in December last year with a price tag of €1.275bn.
Alberto VO5 is one of the leading brands in the acquired portfolio, but as Unilever already owns leading global hair care brands including Dove, Timotei and Sunsilk, the US Department of Justice decided to make it a requirement that the two brands be divested.
Alberto VO5 is a leading hair care brand worldwide
The Alberto VO5 brand was established in the US in 1955 and has since become the leading position in its category. The brand includes a range of conditioners and shampoos targeting the salon hair care category.
The US Department of Justice deemed that Unilever’s strong hair care brand portfolio in the US and Puerto Rico markets would put it in a position of dominance that would threaten to over power the competition.
The Rave Brand is much smaller than the VO5 brand, but has an important hold in the aerosol and non-aerosol hairspray category in key markets worldwide.
As well as Rave and Alberto VO5, the Alberto Culver portfolio also includes TRESemme, Nexxus, St. Ives, Simple and Noxzema, brands that are all expected to help Unilever to compete more effectively on a global scale.
Unilever now leads the way in shampoos and conditioners
Indeed, the acquisition of Alberto Culver by private equity management player Brynwood makes Unilever the world's leading company in hair conditioning and second largest in shampoo.
The move to buy up Alberto Culver underlines Unilever’s business strategy to grow its personal care arm of the business, which has consistently demonstrated higher growth compared to much of its food and beverage operations in recent years.
Earlier this month analysts at investment bank Liberum Capital said they expect Unilever to sell its food arm, excluding the ice cream and beverage category, for an estimated figure of €14bn in an effort to grow its home and personal care business.
Personal care is now Unilever's mainstay
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.
Personal care is by far the biggest category in the Unilever business, and in the first quarter of the year the division 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.
