Spreading the wealth

15 December 2017 By Peter Thal Larsen Follow @Peter_TL

The buyout firm is paying $8 billion for the consumer giant’s unloved margarine unit. Though sales are stagnant, hefty leverage and more focused managers should enable KKR to earn a healthy return. What’s less clear is why Unilever was unable to make those improvements by itself.

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Unilever on Dec. 15 said it had received a binding offer from KKR for its spreads division valuing the unit at 6.8 billion euros.

The business, which includes brands such as Flora and Blue Band, had turnover of 3 billion euros in 2016 and generated EBITDA of 680 million.

After adjusting for the new ownership structure, the unit is forecast to generate EBITDA of 768 million euros in 2017, according to a person familiar with the matter.

If completed, it would be one of the largest private-equity buyouts in Europe since the financial crisis. KKR plans to fund the deal from both its European and North American private-equity funds.

The deal is expected to be completed by mid-2018.

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