Consumer Goods Giant Unilever to Sell Spreads Business to KKR for $8 billion

Household names such as Flora and I Can’t Believe It’s Not Butter have been sold by consumer goods giant Unilever to private equity house KKR in a €6.83 billion ($8.04 billion) deal.

Unilever put the unit up for sale in April in a bid to rejuvenate its business, sparking a bidding war among buyout firms. Bloomberg calculations showed it was the biggest-leveraged buyout in Europe announced this year.

“The announcement marks a further step in reshaping and sharpening our portfolio for long-term growth,” said Chief Executive of Unilever Paul Polman. “The consideration recognizes the market-leading brands and the improved momentum we have achieved.” Mr. Polman was quoted on Reuters.

“I am confident that under KKR’s ownership, the spreads business with its iconic brands will be able to fulfill its full potential as well as societal responsibilities,” he said.

The spreads business has been in decline for years as people eat less bread and margarine, but Unilever has taken steps to stem the decline and the unit is very profitable. That made it attractive to private equity firms who were the main bidders in the auction run by Goldman Sachs and Morgan Stanley.

Unilever said it plans to return the cash to shareholders, unless more value-creating acquisition options arise, according to a report appeared on Reuters.

This year Unilever has snapped up small brands including Tazo tea, Sundial Brands, and Carver Korea.

Unilever said last month it favored ending its dual Anglo-Dutch structure to become a single entity, but it has delayed a decision whether it would be based in Britain or the Netherlands.

KKR is buying the brands – which it said had a “firm foundation for future growth” – even though some analysts believe the sector is slowing down as consumers turn away from margarine. Sales of margarine in the UK are down more than 12 percent on last year, while butter sales have climbed nearly 2 percent, according to figures from research group Kantar World panel earlier this year. KKR was quoted on The Guardian.