Unilever Buys Alberto Culver For $3.7B

AMSTERDAM (AP) -- Consumer products maker Unilever NV said Monday it has agreed to buy Alberto Culver Co., the U.S. maker of beauty products such as TRESemme, VO5 and Noxzema, for $3.7 billion in a management-backed deal.

Unilever, which makes Dove soaps, Degree deodorants and Suave shampoos, said it will offer $37.50 per share for Alberto Culver, a 19 percent premium to its closing price in New York on Friday. The deal must be approved by regulators and Culver shareholders.

Graham Jones, analyst at Panmure Gordon & Co., said the price was "on the high side" but he saw the buy as positive for Unilever.

"It further skews Unilever to high growth, high margin personal care categories, gives a more rounded category presence in hair care and makes it global leader in hair conditioning, No. 2 in shampoo and No. 3 in styling," he said in a note Monday.

Unilever Chief Executive Paul Polman said Culver will fit well with his company's current beauty range.

"Personal care is a strategic category for Unilever and growing rapidly," Polman said in a statement.

Although Unilever intends to grow mostly via its existing brands, "bolt-on acquisitions such as Culver supplement organic growth and add powerful new brands to our portfolio," Polman said.

Culver also owns St. Ives skincare, Nexxus haircare, and it purchased British skincare company Simple Health & Beauty Ltd. last year.

Unilever said it would use its scale and distribution prowess to promote Culver's brands more aggressively in their existing markets, and to introduce them to emerging markets.

Unilever owns big beauty brands such as Dove, Vaseline, TIGI, Pond's and Axe, in addition to its food holdings including Ben & Jerry's ice creams and Lipton teas, and home care brands such as Surf and Sunlight.

Last September it agreed to buy the soaps and personal care businesses of Sara Lee Corp. for $1.88 billion. The deal, which includes Europe's Sanex and Duschdas brands, still awaits regulatory approval.

Polman said the Culver deal would add to Unilever's per-share earnings in the first year.

Unilever, with dual headquarters in London and Rotterdam, Netherlands, is the world's third-largest maker of consumer products behind Procter & Gamble and Nestle.

Alberto Culver, based in Melrose Park, Illinois, has a market capitalization of about $3.1 billion based on Friday's closing stock price of $31.48.

Unilever shares were up 2 percent to €22.28 ($29.88) in early trading in Amsterdam.

Analyst Jeremy Batstone-Carr of Charles Stanley research said the buy would increase competitive pressure on P&G in the U.S., where it owns the rival Pantene, Herbal Essences, Head & Shoulders and Clairol brands.

Batstone-Carr said the quality of the deal for Unilever would depend on how much cost-savings it can wring out of Culver.

"Were Unilever to derive savings on the order of 10 percent of sales, this could add in excess of 3 percent to existing earnings per share estimates," he said in a note on the deal. He rates shares "Accumulate."

Alberto Culver generated sales of around $1.6 billion and operating earnings of around $250 million for the 12-month period ending June 30, 2010, Unilever said.

Unilever's personal care products became its largest unit in the second quarter, accounting for 30 percent of revenues. Recent strong performers include Degree deodorants in the U.S., Dove in Brazil and Rexona in Japan.

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