Consumer products giant
) is focused on shaping its portfolio to deliver sustainable
growth and thereby concentrate in its core foods portfolio. In
order to do so, it has recently completed the sale of its
Wish-Bone salad dressing business to
Pinnacle Foods Inc
). The deal was announced on Aug 12 for $575 million in cash.
The sale does not include Unilever's facility in Missouri,
where the brands are produced. Post-acquisition, the facility
will continue to manufacture brands for Pinnacle Foods under a
Wish-Bone is a leading salad dressing brand and holds the
number one position in the Italian segment of the category. Wish
Bone dressings include a broad range of liquid and dry-mix salad
dressing flavors and comes under the Wish-Bone and Western brand
Of late, Unilever has been divesting its business to focus its
resources on the core food portfolio. In Jan 2013, the company
sold its Skippy peanut butter business to Austin, Minn.-based
producer of branded food and meat,
Hormel Foods Corp.
) for $700 million in cash. In Aug 2012,
ConAgra Foods Inc.
) bought its Bertolli and P.F. Chang's frozen meals brands for
One more reason for this divestiture is that the markets in
the developed countries are mostly saturated and the
macroeconomic climate is not conducive. As a result, business in
these markets has been sluggish and volumes disappointing.
Therefore, the company is making a strategic move to optimize its
resources and allocate them to the more promising markets.
The sale to Pinnacle Foods will prove beneficial to the
company as the brands have attractive margins. The acquisition is
expected to immediately enhance Pinnacle's profits. The deal is
in line with the company's 'Reinvigorating Iconic Brands'
strategy, which involves actively managing iconic food brands
with leading market positions.
Unilever holds a Zacks Rank #3 (Hold) while Pinnacle holds a
Zacks Rank #1 (Strong Buy).
CONAGRA FOODS (CAG): Free Stock Analysis
HORMEL FOODS CP (HRL): Free Stock Analysis
PINNACLE FOODS (PF): Free Stock Analysis
UNILEVER PLC (UL): Free Stock Analysis Report
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