Unilever hopes to clean up after £2.3bn conditioner deal

Will the FMCG giant's acquisition of VO5 maker Alberto Culver - making it a world leader in hair care - be tangle-free?

by James Taylor
Last Updated: 19 Aug 2013
Consumer goods behemoth Unilever has announced a big deal this morning: it's splashing out £2.3bn on Alberto Culver, the company behind the likes of VO5, TRESemme and Simple. That's a lot of money, though it will apparently make Unilever the world number one in hair conditioning - a noble ambition, we're sure you'll agree. Personal Care (which also incorporates brands like Dove and Vaseline) has been a big winner for Unilever in recent years; presumably washing and grooming are among the more recession-proof activities...

Unilever has pretty deep pockets, but this is still a pretty sizeable deal - particularly given that Alberto Culver had revenues of about £1bn in the year to June (making this a fairly hefty multiple). But for a company that's all about brands, there are some pretty well-known ones in the AC stable. And according to Unilever CEO Paul Polman, they'll allow Unilever to cover a wider range of price points - which we think is a nice way of saying they can now sell to the customers who don't like to spend half their monthly salary on hair products.

What's more, this deal is intended to help Unilever accelerate its growth in a market that's proven very successful for it. Its Personal Care unit now accounts for about 30% of the group's revenues - up from 20% a decade ago, thanks to strong organic growth both at home and (particularly) in emerging markets. Here at MT we can't all boast thick, glossy, lustrous locks, but we're inclined to agree that it's probably a growth area. And since some of its more traditional markets (like food and drinks) have been a bit tricky lately, it probably makes sense.

Incidentally, just as one big UK-based FMCG launches a big takeover, we notice that another looks set to fall into Chinese hands: the FT reports that Shanghai-based Bright Foods is in exclusive talks to buy Jaffa Cake-maker United Biscuits. After all the hoo-ha surrounding the Cadbury sale earlier this year, it might seem odd that hardly anyone appears to be batting an eyelid about this – but since UB has been owned by two foreign private equity firms since 2006, it's probably a bit late now to start bemoaning the passing of another famous UK company...

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