Interview Synopsis

Unilever – growth strategy update & M&A optionality

  • Multi Asset
  • Consumer
  • Europe

Consumer goods giant Unilever, whose hunger for growth includes an appetite for acquisitions, recently said it is scrapping its Anglo-Dutch HQ structure for one UK entity.

“Transformational” M&A on the cards at Unilever

“The fact that they’ve then decided to do it the other way around, into the UK, out of the eurozone and out of the EU, is a testament that this is a very important move for them and that they are prepared to incur some costs in order to do that,” one of the company’s former VPs told Third Bridge Forum. 

The Interview focused on Unilever’s growth strategy, including emerging market priorities. Among the areas covered, the expert shared his thoughts on speculation that the unification could result in a spin off of the foods and refreshment division from the home and personal care business. “I don’t think that the unification in itself makes that split any more likely or less likely,” he said. The sale of its spreads business has also “removed a drag on growth”. 

Meanwhile, the struggling tea business, as explored in another Forum Interview, was high on the agenda. A sale has been widely anticipated, although the company is now reportedly planning to keep parts of the Indian and Indonesian businesses, and perhaps retain its stake in the Pepsi Lipton JV. 

Unilever’s current acquisition strategy is to “bolt on” emerging consumer brands, which the expert believes is “going to continue to be the thrust of it”, particularly across the food segment. 

“If you were to do a big matrix of categories and countries across Unilever, there’s still a surprising number of either white spaces or what they would refer to as quiet spaces, where they may have a very small business… and where there would also be an opportunity to in-fill,” he said. The Interview also discussed three potential areas of further divestment. 

Beauty and personal care, which has been managed as a single division for about 10 years, was also placed under the microscope. “It has historically been a very strong growth driver within Unilever at good margins, a very strong emerging market footprint and, with many categories still developing very rapidly in those emerging markets, so with plenty of runway in terms of category growth,” the specialist said. However, as new product categories have emerged, market competition has intensified. 

Unilever has also made several acquisitions in the prestige beauty segment as part of its plan to bolster this area with sales of up to EUR 1bn. However, the journey has been slower than expected, with COVID-19 having also thrown a spanner in the works. “A lot of money and time has been sunk into it and I think Unilever will fight like crazy to make a success of it.”

To access all the human insights in Third Bridge Forum’s Unilever – growth strategy update & M&A optionality Interview, click here to access the full transcript. 

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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