LONDON—Unilever, a leading consumer goods company, agreed to acquire 82 percent of Concern Kalina, a leading Russian beauty company. The transaction, which is pending required regulatory approvals, values the equity of the total business at RUB 21.5 billion (€ 500 million).
Concern Kalina , headquartered in Ekaterinburg, is Russia’s largest local personal care player with leading positions in skin and hair care, and an expected 2011 turnover of around RUB 13 billion (€ 303 million). The company has a strong, extensive distribution network and sells its products primarily in Russia, Ukraine and Kazakhstan. It employs around 1,900 people.
Paul Polman, CEO of Unilever said: "We are delighted to be acquiring Concern Kalina. This will transform Unilever’s personal care business in Russia, giving us leading positions in skin care and hair care, as well as establishing a presence in oral care. It will also strengthen and re-balance Unilever’s portfolio and competitive position in Russia, an emerging market with considerable potential and one of our priority countries. Personal Care is a strategic category for Unilever and growing rapidly. Ten years ago, it represented 20 percent of Group turnover; strong organic growth has driven it to now reach more than 30 percent, with strong positions in many of the emerging markets.
“Organic growth remains the cornerstone of our ambition to double the size of Unilever while reducing our overall environmental impact. Acquisitions such as Concern Kalina supplement organic growth and add powerful new brands to our portfolio."
The transaction fulfils a number of key criteria for Unilever:
- It enhances Unilever’s presence in an attractive, high-growth market with a differentiated portfolio, which has grown at above market rates in competitive categories;
- It adds to Unilever’s portfolio successful, authentic Russian brands in skin care, hair care and oral care like Pure Line, Black Pearl, Silky Hands, 100 Recipes of Beauty and Forest Balm, complementing Unilever’s own brands such as Dove, Sunsilk, Timotei and Clear;
- It provides Unilever with the opportunity to use its technology to take these brands to a new level.
Timur Goryaev, Chairman of Concern Kalina, said: "The agreement reached with Unilever will enable the brands we have built into some of Russia’s best loved and most recognized since we started in 1996 to be taken to new heights."
Alexander Petrov, CEO of Concern Kalina, added: “The coming together of our company with one of the most successful and best-known global companies represents a tremendous vote of confidence in the strength of our brands, the people who have built them and the potential of the Russian market. The combination with Unilever will also provide our employees with opportunities in one of the best companies in the world."
The transaction implies an enterprise value for 100 percednt of Concern Kalina of approximately RUB 25.9 billion (€604 million). This represents a sales multiple of 2.0 and a pre-synergy proforma EBITDA multiple of 11.7. The price per share is RUB 4.098, calculated on the basis of 5.2 million outstanding shares in circulation. The price per share is subject to a number of completion adjustments and the final share price on closing could be different.
Subject to obtaining the required regulatory approvals, the acquisition is expected to complete by the end of 2011. On completion Unilever intends to launch a Mandatory Tender Offer to acquire the remaining shares that are not part of the initial agreement, at such time and on terms mandated by Russian law.
