A state-backed Singaporean fund is joining forces with one of the world’s biggest buyout firms in an effort to trump rivals’ £6bn bids for Unilever’s spreads operations.
Sky News has learnt that the Asian city-state’s Government Investment Corporation (GIC) has agreed to back KKR’s interest in buying brands such as Flora and I Can’t Believe It’s Not Butter.
The emergence of another consortium in the auction will raise hopes among Unilever’s investors that the Anglo-Dutch consumer goods giant can attract a bumper price for the division.
KKR’s likely joint bid with GIC, which owns stakes in British companies such as the RAC roadside recovery service, follows that of two others led by private equity giants.
Sky News revealed several weeks ago that Blackstone and CVC Capital Partners had sought Unilever’s approval to lodge a joint bid for its international spreads division.
Marc Bolland, the former M&S and Heineken executive, and Harish Manwani, a Unilever veteran – will be involved in their offer.
Another consortium comprising Clayton Dubilier & Rice (CD&R) and Bain Capital is also preparing to bid.
CD&R’s interest will lean heavily on Vindi Banga, a former Unilever foods executive, and Sir Terry Leahy, the former boss of Tesco – both of whom are already closely involved with the buyout firm.
Unilever could opt to dispose of the spreads business through a demerger to its existing shareholders if offers are not sufficiently attractive.
Video: Flora’s owner targets savings alongside sale
Announcing half-year results last month, Paul Polman, Unilever’s chief executive, said preparations for an auction were “well underway”.
The intention to sell or demerge the spreads division was announced two months after Unilever was the subject of an unsolicited £115bn takeover approach from Kraft Heinz, the US-headquartered food giant.
The move from Kraft Heinz sparked a hostile reaction from the Unilever board and rang alarm bells in Downing Street, where Theresa May had vowed to clamp down on unwanted foreign takeovers.
Mr Polman, who said that Unilever was becoming a “more resilient, more competitive and more profitable” company, had called for a “level playing field” in response to the Kraft Heinz approach.
He later insisted that he was not calling for the Anglo-Dutch fast-moving consumer goods group to receive special protection from the Government.
In recent months, Unilever has been linked to a bid for the £3bn food unit of Reckitt Benckiser, which it agreed to sell instead to McCormick’s of the US.
Mr Polman has also turned to faster-growing categories for takeover opportunities, snapping up the online-based Dollar Shave Club for $1bn last year.
The spreads category has been in long-term decline as increasingly health-conscious consumers have turned to butter-based products.
KKR and Unilever declined to comment.
Source: Sky