Anglo-Dutch consumer product maker Unilever has agreed to buy U.S. hair and skincare product maker Alberto Culver for $3.7 billion dollars. For Unilever, it is the biggest deal since the $24.3 billion Bestfoods takeover ten years ago. This means Unilever will be adding brands such as VO5, TRESemme, Simple and Nexxus to its existing products, such as Dove, Axe, Suave and Sunsilk.
The deal offers $37.50 / share for Alberto Culver, whose shares closed at $31.48 on Friday, jumping to $37.60 in early trading in New York on Monday.
Unilever CEO Paul Polman said that personal care products represent 30% of the company’s turnover, adding, “Organic growth remains the cornerstone of our energizing ambition to double the size of Unilever whilst reducing our overall environmental impact. Bolt-on acquisitions such as Alberto Culver supplement organic growth and add powerful new brands to our portfolio.”
Analysts say the takeover will improve Unilever’s hair care sales in the U.S., where an estimated 65% of Alberto Culver brands are sold. By adding Alberto Culver’s 2% to Unilever’s 11% share of the global hair care market, it will also reinforce Unilever’s position globally. The consumer product maker currently has the third largest share of the global hair care market, after Proctor & Gamble (23%) and L’Oreal (18%). Analysts also say the takeover will make Unilever the world leader in hair conditioning products, the second largest in shampoo and the third largest in hair styling products.
Following Monday’s takeover announcement, Unilever shares rose by 1.34 per cent on the FTSE 100 in Tuesday early trading, and by 2 percent to -22.28 ($29.88) in early trading in Amsterdam.
Unilever’s acquisition of Alberto Culver is subject to the regulatory approval and of Alberto Culver shareholders. Alberto Culver representative Dan Stone said that the decision to sell had been made because it was felt that many of the company’s brands would receive increased international attention at a bigger company.