KKR, Cinven Among Firms Weighing Unilever Tea Bids

(Bloomberg) -- Some of the world’s top buyout firms, from KKR & Co. to Cinven, are among potential suitors weighing bids for Unilever’s tea business, people familiar with the matter said.

Advent International, Bain Capital and Blackstone Group Inc. are also considering making offers for the unit, which controls brands including century-old Lipton, the people said, asking not to be identified because the information is private. Unilever could fetch more than 5 billion pounds ($6.3 billion) from the divestment, depending on which assets are included in a transaction, the people said.

The Unilever division has separately attracted interest from Swiss investment firm Jacobs Holding AG, the owner of chocolate maker Barry Callebaut AG, as well as private equity firm Clayton Dubilier & Rice, the people said. Some suitors are in talks to hire advisers as they prepare for the auction to kick off, according to the people. Unilever is considering starting the bidding process after the summer holidays, the people said.

Chief Executive Officer Alan Jope has been seeking to reshape the operations of Unilever, which sells Dove soap and Ben & Jerry’s ice cream, as consumers turn away from the traditional big brands. The potential sale is poised to rank as one of company’s largest-ever disposals and would follow the $8 billion sale of its margarine and spreads business to KKR in 2017.

Fierce Competition

Cinven is discussing the possibility of a joint offer for the tea business with the Abu Dhabi Investment Authority, according to one of the people. It teamed up with the sovereign wealth fund on some of its most high-profile purchases, including its proposed $19 billion acquisition of Thyssenkrupp AG’s elevator unit and its multibillion-dollar purchase of British scientific measurement company LGC Group this year.

Shares of Unilever fell 1.2% in London trading at 8:23 a.m. Wednesday in the U.K., giving the company a market value of about $146 billion. Any transaction will add to the $345.7 billion of consumer deals announced this year, according to data compiled by Bloomberg.

Unilever said in January it’s starting a strategic review of the tea business that could result in a partial or full sale. Deliberations are at an early stage, and there’s no certainty the suitors will proceed with bids, the people said. Representatives for Unilever and the potential bidders declined to comment.

Private equity firms flush with cash have been fiercely competing for assets being carved out of large corporates. Nestle SA agreed to sell its $10 billion skincare business last year to an investor group led by EQT AB. KKR reached a deal in March to buy Pennon Group Plc’s waste-management business for 4.2 billion pounds.

Unilever said this month it plans to combine its U.K. and Dutch arms under a single British headquarters to boost dealmaking flexibility. Eliminating the dual legal structure will result in one class of shares and a single pool of liquidity, providing more flexibility for stock-based acquisitions and divestments, the company said.

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