Only a company as big as Unilever could describe a $3.5bn (£2.3bn) acquisition as 'bolt on', although, as broker Execution Noble noted, it is still stretching its definition somewhat to encompass the agreed purchase of US based personal care group Alberto Culver.
It also underplays the strategic importance of the deal to Unilever, as it seeks to recycle capital from the disposal of mature food businesses into the faster growing and higher-margin personal care segment. The deal adds brands including VO5 and TRESemme, the fastest growing daily haircare brand in the US and, according to broker Panmure Gordon, will double Unilever's share of the hair-care segment in its operating markets to between 14 and 20 per cent. The deal complements the $1.3bn ongoing takeover of Sara Lee's European Personal Care business, and will increase the proportion of sales from personal care to around 30 per cent of the group total, up from 20 per cent a decade ago.
Analysts were unfazed by the price - which represents a punchy EV to Ebitda multiple of 14.8 - pointing out that the deal will be immediately earnings enhancing and offers a further €150m (£130m) of potential cost savings. And although Culver generates three-quarters of its sales in developed markets, analysts are confident that Unilever can leverage the acquired brands through its emerging market distribution channels.
Meanwhile, a more typical bolt-on deal came in the form of PZ Cussons' £62.5m cash purchase of fake tan brand St Tropez, adding to its so-called 'masstige' portfolio that already includes Sanctuary spas and Charles Worthington haircare products. St Tropez generated profits of £7.5m on sales of £20.7m last year.
