Unilever Group has agreed to acquire Alberto Culver, the world’s sixth largest hair care manufacturer for US$ 3.7bn. The deal will increase Unilever’s global market share of the beauty and personal care industry from 6.8% to 7.2% according to Euromonitor International’s data, cementing its third place ranking behind the industry leaders Procter & Gamble and L’Oreal.
Set for further expansion following consolidation
Over the last decade Unilever increasingly lost ground to Procter & Gamble and L’Oreal, who took part in a number of significant acquisitions. In contrast, Unilever saw its share declining, unable to react to market dynamics, with a decentralised sprawling global business, which lacked proper coordination, resulting in a drain on resources due to duplication of operations. It subsequently embarked on a restructuring programme to consolidate its business and is beginning to reap the benefits. It has divested non-core assets, including its oils & fats businesses and has been able to utilise the funds generated firstly in the 2009 acquisition of Sara Lee’s personal goods business and now Alberto Culver.
The appointment of Paul Polman as CEO, is certainly key to this strategy and the added focus on personal care is in line with his background in this division at Procter & Gamble. He has also intimated that further activity is likely, with the company looking to spend between Euro 1bn and Euro 2bn a year on acquisitions.
The acquisition is not without wider geographic benefits. Alberto Culver has established itself in a number of emerging markets including Mexico, China and Argentina. Its relative presence, however remains small and Unilever’s extensive geographic reach should enable further expansion. Alberto Culver’s more premium range will complement Unilever’s more standard portfolio and this diversity will help protect it from macro economic trends and give it a strong footing on which to negotiate distribution with retailers.