Cheer Up, Buttercup: Unilever's Spreads Have Found a New Home

(Bloomberg) -- Unilever has finally gotten itself out of a jam.

The owner of spreads and margarine brands like I Can’t Believe It’s Not Butter! sold them to KKR & Co. for 6.83 billion euros ($8.1 billion) on Friday, three years after separating the division from its main operations. In doing so, the Anglo-Dutch company is parting with one of its oldest businesses -- its Netherlands arm traces its roots back to the world’s first margarine factory, founded in 1872.

While margarine enjoyed healthy growth in the postwar years, more recently it’s fallen victim to a preference for all things authentic and natural -- including butter, which is in such high demand that some French supermarkets can’t even get their hands on any. The trend toward gluten-free eating hasn’t helped.

A sustained market decline in Europe and North America because of reduced consumption of bread has reduced appetite for the division’s brands, which include Flora, Stork and Country Crock, Unilever Chief Financial Officer Graeme Pitkethly said last year.

Why would KKR want a business whose sales shrank by 2 percent in the third quarter, amid a structural decline in its market? The division still spreads the profits on thick -- to the tune of 20 percent, compared with Unilever’s overall 16 percent, according to Warren Ackerman, an analyst at Societe Generale.

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