Unilever Gets Solid Price for its Sanex Brand

In addition to the sale of Sanex, Colgate and Unilever have undergone a number of transactions and we believe they are all in line with the firms' strategic objectives

Lauren DeSanto 24 March, 2011 | 8:58AM
Facebook Twitter LinkedIn

Colgate-Palmolive's (CL) first acquisition since 2006 is a small but smart deal for the firm. By acquiring the Sanex personal-care brand (which includes shower gels and deodorants) from Unilever (ULVR) for $940 million, or roughly 3.6 times fiscal 2010 sales, Colgate expands its presence in Western Europe at a time when competition has become particularly heated. Unilever was forced to sell the business for antitrust reasons after it acquired Sara Lee's personal-care business in 2009, but it appears that it is getting a solid price for this attractive brand. Moreover, the sale should also enable Unilever to finally close the transaction with Sara Lee, which was announced about a year and a half ago.

In addition to the Sanex sale, Unilever announced that it is buying Colgate's Colombian laundry detergent business, which includes the Fab, Lavomatic, and Vel brands, for $215 million. This deal fits with Colgate's desire to exit the category and is in line with Unilever's recent strategic efforts to build out its higher-margin household business in faster-growing emerging markets. We don't intend to change our fair value estimates for either firm on the basis of these announcements, given the relatively small size of the transactions, but we think Unilever remains fairly valued and Colgate modestly undervalued at current market prices.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Unilever PLC4,409.00 GBX0.07Rating

About Author

Lauren DeSanto  Lauren DeSanto is Morningstar's chief operating officer for equity research.

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures