UK
Unilever is wavering following a June decision to auction several of the world’s iconic tea brands. The tea division generated $3.3 billion last year and could bring as much as $6.3 billion, depending on which assets are included in the transaction, according to Bloomberg News. Six or more global buyout firms indicated interest, with an auction likely in August.
In July Bloomberg reported the Anglo-Dutch multinational “is considering substantially scaling back” the sale, which may now exclude its tea businesses in India and Indonesia as well as its stake in a joint venture with PepsiCo Inc. that supplies bottled Lipton teas. This could lower the offerings to $5 billion.
Bidders are likely to include KKR & Co.; Cinven, a European-based global private equity firm headquartered in London; and Bain Capital, a Boston-based equity investor with more than $100 billion of capital and stakes in Burger King, Domino’s Pizza, and Dunkin coffee and donuts.
Others mentioned in press accounts include Blackstone, Advent International, New York-based Clayton Dubilier & Rice, and Jacobs Holding AG in Zurich.
The combined portfolio includes Lipton Yellow Label, PG Tips, Lyons, Brooke Bond Red Label, TAZO Tea, Pukka Herbs, Bushells, Red Rose, T2, Sariwangi, Saga Tea. Lan-Choo, Choysa, Joko, and Pure Leaf and assorted joint ventures. In January, Unilever c.e.o. Alan Jope announced in frustration that the massive but slow-growing tea segment was under review. Lipton Yellow Label generates more than $1 billion in sales annually, but commodity blends are declining as consumers abandon tea for coffee, switch to better-tasting tea, substitute herbal infusions, or green tea for traditional black tea blends. Last year, Twinings overtook PG Tips as the UK’s best-selling tea brand.
Unilever successfully halted an unwanted bid by Kraft Heinz Co. in 2017 and needs to bulk up as Nestle and other global competitors continue to expand. In the most recent quarterly financial report, Nestle posted its highest growth in five years, the result of nimble acquisitions and disposals. In contrast, Unilever failed to achieve any sales expansion in the first quarter.