INVESTORS should keep their hair on. Financially, this deal makes sense. Unilever’s $37.5bn-a-share offer, which values Alberto Culver at around $3.6bn, is good value. The offer, which is worth around 12 times prospective earnings for 2011, is pretty cheap when compared to similar deals.
Which is just as well, because the deal – while sensible – is not going to change the world. It will strengthen Unilever’s number three position in the haircare market, but that’s about it. Procter & Gamble has a 23 per cent share of the global haircare space, compared to 18 per cent for L’Oreal and 11 per cent for Unilever. Alberto’s share is just two per cent, however, although it does have a strong showing in North?America, where it has 11 per cent of the market compared to six per cent for Unilever.
Still, the North American strength belies an international weakness. Around 75 per cent of Alberto’s revenues come from more mature markets. Hopefully Unilever will be able to squeeze value from the acquisition by using its strong emerging markets network to distribute brands like VO5 and TRESemme.
Savings of around €150m a year, while welcome, are hardly big news either. This is what Unilever does best: a sensible – if somewhat boring – acquisition.