The City has dismissed suggestions the European Commission's extended probe into Unilever's proposed purchase of Sara Lee's European personal care business could thwart the deal.
In May, the EC said initial investigation of the £1bn tie-up had thrown up potential competition concerns in product markets including deodorants, skin cleansing and fabric care products. It extended its deadline to 5 October for a final decision on whether to clear or block the deal.
Unilever confirmed last week it had received a statement of objections from the EC but said it was confident of a positive agreement in the fourth quarter. Neither parties proposed any remedies during the first phase of the review but experts have suggested modest divestments in the Sara Lee portfolio could alleviate concerns.
Significant structural adjustments in Unilever's core brands were unlikely, said Collins Stewart analyst Rob Mann. "They are not going to divest their major existing deodorant brands because they are particularly strong," he said. "If they have to get rid of anything it would probably come from the acquired portfolio. It strikes me as an enormous storm in a teacup but no doubt it will prolong the process."
The objection shouldn't be viewed as a deal-breaker, said Hogan Lovells counsel Suzanne Rab. "Unilever and Sara Lee are well-advised companies. The fact a statement of objections has been issued doesn't necessarily mean the deal's all over," she said.
Unilever could well argue that the strength of buyer power and private-label products in the market would prevent it raising prices in any product line, even if it had higher market shares, she said.
In November last year, Unilever indicated it didn't want to divest more than £8.2m worth of turnover in laundry care and £58m in body care markets. It also highlighted that it wanted to hang on to brands Rexona/Sure, Axe/Lynx, Dove and Vaseline in the UK and Ireland, and Sara Lee's Sanex.
In May, the EC said initial investigation of the £1bn tie-up had thrown up potential competition concerns in product markets including deodorants, skin cleansing and fabric care products. It extended its deadline to 5 October for a final decision on whether to clear or block the deal.
Unilever confirmed last week it had received a statement of objections from the EC but said it was confident of a positive agreement in the fourth quarter. Neither parties proposed any remedies during the first phase of the review but experts have suggested modest divestments in the Sara Lee portfolio could alleviate concerns.
Significant structural adjustments in Unilever's core brands were unlikely, said Collins Stewart analyst Rob Mann. "They are not going to divest their major existing deodorant brands because they are particularly strong," he said. "If they have to get rid of anything it would probably come from the acquired portfolio. It strikes me as an enormous storm in a teacup but no doubt it will prolong the process."
The objection shouldn't be viewed as a deal-breaker, said Hogan Lovells counsel Suzanne Rab. "Unilever and Sara Lee are well-advised companies. The fact a statement of objections has been issued doesn't necessarily mean the deal's all over," she said.
Unilever could well argue that the strength of buyer power and private-label products in the market would prevent it raising prices in any product line, even if it had higher market shares, she said.
In November last year, Unilever indicated it didn't want to divest more than £8.2m worth of turnover in laundry care and £58m in body care markets. It also highlighted that it wanted to hang on to brands Rexona/Sure, Axe/Lynx, Dove and Vaseline in the UK and Ireland, and Sara Lee's Sanex.
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