Unilever and South African investment company Remgro have announced a ZAR 11.9 billion ($900 million) deal in which Unilever trades its spreads business in southern Africa for Remgro’s stake in its South African subsidiary.
The companies said that Unilever would purchase Remgro’s 25.75% share in Unilever South Africa Holdings in exchange for the spreads business – valued at ZAR 7 billion ($520 million) – and cash of ZAR 4.9 billion ($360 million).
The deal marks the first step in Unilever’s strategy to sell its spreads portfolio, which includes brands like Flora and Stork, as part of a major structural review following Kraft Heinz’s $143 billion takeover offer.
Remgro will now gain full control over the Unilever spreads business in South Africa, Botswana, Lesotho, Namibia and Swaziland.
With consumers slowly moving away from the margarine category amid changing health perceptions, Unilever’s spreads business has been in decline for years.
However, in its half-year results published in July, the company’s spreads business slowed decline from 5.1% in the first quarter to 3.7% over the first six months of the year. The rate of decline is said to be a result of sales growth in emerging markets offsetting the marketing contraction in developed countries.
Speaking of the deal, Remgro CEO Jannie Durand said: “We believe the Unilever spreads business in these southern Africa countries is an attractive business, with leading brands which include Rama, Stork, Flora and Rondo with good growth prospects.”
“This transaction is a vote of confidence in the future of South Africa, Botswana, Lesotho, Namibia and Swaziland. We thank Unilever for the longstanding relationship and wish Unilever and the employees of Unilever SA well for the future. We welcome the prospect of having the spreads business as part of the Remgro Group.”
Unilever SA executive vice president Luc-Olivier Marquet added: “Unilever South Africa is a great business, well positioned for sustainable long-term growth. By giving us full ownership of the business, this transaction means we are better placed to accelerate that growth while the spreads business moves on to Remgro where it augments their current portfolio and can be sure of a great future.”
© FoodBev Media Ltd 2019
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