Unilever (ULVR) today announced its intentions to acquire 82% of Kalina, a leading Russian beauty-care firm, for about EUR 495 million. The deal implies a forward price/sales multiple of 2.0 times and an enterprise value/EBITDA of 11.7 times, which seems reasonable to us. We're not making any changes to our fair value estimate for Unilever based on this announcement, as the acquired business will represent less than 1% of the global consumer product firm's consolidated sales. However, this deal supports our sentiment that our wide- and narrow-moat companies with substantial cash piles are taking advantage of opportunities to build out product portfolios and gain footholds in key emerging markets through smaller tuck-in acquisitions. The acquisition of Kalina is also in line with Unilever's recent strategic efforts to build out its higher-margin personal-care business (about one third of sales and operating profits), following on deals to buy Sara Lee's personal-care portfolio as well as Alberto Culver. Unilever derives about 50% of sales from emerging markets, where it is generating high-single-digit volume growth, which should offset sluggish growth in more mature developed markets. We expect that the firm will continue to look to expand its presence in these emerging markets. Trading at 14 times our fiscal 2012 earnings per share estimate, though, the shares are currently fairly valued, in our opinion.
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