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Unilever has agreed to sell its global tea business to CVC Capital Partners for €4.5bn (£3.8bn).
The European private equity firm saw off competition from rival investment houses Advent and Carlyle in an auction that concluded yesterday afternoon.
Unilever’s tea business, Ekaterra, is home to a portfolio of 34 brands, including PG Tips, Lipton and Pukka.
Despite being the world’s largest tea maker, with annual revenues of about €2bn, the business has been a drag on Unilever’s growth in recent years as consumers switched from traditional black teas to other hot drinks.
The sale to CVC ends a two-year long process to spin out and divest Ekaterra.
Unilever CEO Alan Jope said: “The evolution of our portfolio into higher growth spaces is an important part of our growth strategy for Unilever. Our decision to sell Ekaterra demonstrates further progress in delivering against our plans.
“We are proud of the place that our tea business has in our company’s history. We look forward to seeing Ekaterra, with its strong brands and global footprint, prosper under CVC’s ownership. I would like to thank our tea colleagues around the world for their passion and commitment to our tea business and wish them well for the future.”
The sale of Ekaterra does not include Unilever’s tea business in India, Nepal and Indonesia, as well as Unilever’s interests in the Pepsi Lipton ready-to-drink tea joint ventures and associated distribution businesses.
Pev Hooper, a managing partner at CVC, added: “Ekaterra is a great business, built on strong foundations of leading brands and a purpose-driven approach to its products, people and communities.
“Ekaterra is well positioned in an attractive market to accelerate its future growth, and to lead the category’s sustainable development. We look forward to working with the team to realise Ekaterra’s full potential.”
Ekaterra CEO John Davison said: “Ekaterra is a strong business with positive momentum and has an exciting future ahead under the new ownership of CVC. We look forward to the next stage of our journey as the world’s leading tea business.”
The deal is expected to close in the second half of 2022 following regulatory approvals.
Shares in Unilever opened down by 0.6% to 3,802p this morning.
Morning update
Consumer confidence in the UK has nudged higher in November despite decade-high inflation and supply chain challenges, according to a closely watched monthly survey.
GfK’s long-running Consumer Confidence Index increased three points to -14 in November – significantly higher than -33 a year ago.
The headline rate in consumer sentiment ticked up despite soaring inflation, fears of higher prices and worries over rising interest rates as the deepening cost-of-living squeeze leaves UK household finances worse off this winter, said Joe Staton, client strategy director at GfK.
The view on the general economic situation over the past year improved by six points to -40 month on month, while expectations for the coming 12 months climbed three points higher to -23.
However, consumers are less optimistic about their personal finances, with the index measuring changes over the past 12 months down two points to -7 and up one point to +2 for the coming year.
“This weakness is important as it reflects day-to-day plans to save or spend and is a strong driver of overall UK economic growth,” Staton said.
“However, one highlight for both physical and virtual retail is the seven-point jump in major purchase intentions in the run-up to Black Friday and Christmas. Is this a sign that shoppers are ready to bounce back, after last year’s cancelled family gatherings, with a Christmas splurge in coming weeks? That’s how it looks but consumers also know that when the festivities are over it’s going to be a tough year in 2022.”
Logistics firm Wincanton has revealed record first-half results with underlying profits back above pre-pandemic levels, despite the ongoing HGV driver shortage pushes up labour costs for the industry.
Revenues in the six months to 30 September increased 19.3% year on year to £690.3m, while underlying EBITDA rose 17.6% to £50.8m and underlying pre-tax profits jumped 43% to £27.3m.
CEO James Wroath said: “We have delivered a strong set of results in the first half of the year with record levels of growth and positive contributions from all parts of the business. Importantly, we have also made meaningful progress against our strategic priorities.”
He added: “I am particularly pleased that we have delivered this performance notwithstanding the well-documented challenges across the supply chain. We are taking steps to address shortages of labour and we are well positioned to deal with the cost pressures we are seeing across our markets.”
Shares in the group rose 1.1% to 385p this morning as markets opened.
The FTSE 100 is looking more positive this morning, rising 0.3% to 7,277.04pts so far.
Early risers included Ocado Group, up 4.5%, McColl’s Retail Group, which is back up 2.6% to 14.1p after the sell off earlier in the week, and Hilton Food Group, up 1.2% to 1,226p.
Parsley Box Group, Naked Wines, Fever-Tree Drinks and SSP Group were all in the red first thing, down 2.2% to 43p, 2% to 601p, 1.3% to 2,686.5p and 0.6% to 261.2p respectively.
Yesterday in the City
The FTSE 100 continued its miserable week, falling another 0.5% to 7,257.05pts.
Naked Wines slumped 7.4% to 625p as the online wine seller warned it sales would be lower than guided as customers returned to out-of-home drinking experiences. However, the business did turn a profit for the first time in the half.
McColl’s Retail Group sank another 6.4% to 13.7p as investors remained unimpressed with Wednesday’s profit warning.
Shares in Finsbury Food Group rose 1.7% to 99.6p after the cake manufacturer released a positive trading statement for the start of its new financial year, while Eagle Eye increased 5.9% to 603.5p on a profits upgrade.
Other risers included Bakkavor, up 4.8% to 123.6p, Marks and Spencer Group, up 2.7% to 233.9p, and Virgin Wines UK, up 2.4% to 192p.
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