UK – British multinational consumer goods company, Unilever Plc has agreed to sell its global tea business to CVC Capital Partners for 4.5 billion euros (US$5.1 billion).
Unilever started reviewing its tea business almost two years ago after sales slipped as many consumers switched to alternatives such as kombucha, coffee, and herbal tea.
The business being sold, called Ekaterra, hosts a portfolio of 34 tea brands including Lipton, PG Tips, Pukka Herbs, and TAZO. It generated revenues of 2 billion euros in 2020.
Ekaterra will be sold to CVC’s Capital Fund VIII on a cash and debt-free basis in a process that is expected to conclude in the second half of 2022, Unilever said in a statement
“The evolution of our portfolio into higher growth spaces is an important part of our growth strategy for Unilever. Our decision to sell ekaterra demonstrates further progress in delivering against our plans,” Unilever’s CEO Alan Jope said.
Unilever’s tea operations in India and Indonesia tea operations along with its bottled tea joint venture with PepsiCo will however not be sold and will continue to be part of the group’s food division.
Unilever had earlier maintained that it would not sell its Kenya tea business only renege and announce a sell it to UK-based Holdco Limited (TeaCo).
The sale of Ekaterra relieves Unilever of a business that has been a drag on earnings for several years as demand for black tea waned and consumer tastes changed.
Its presence as part of the group was thus no longer aligning with Jope’s plan to focus on higher-growth areas such as plant-based foods, nutrition, and premium beauty to boost sales growth.
Focus on high-growth business traces its roots to CEO Paul Polman’s tenure. Polman sold Unilever’s margarine and spreads business to KKR & Co. for about US$8 billion.
The firm also tried to offload its beauty product portfolio for US$1 billion but abandoned the plan after failing to attract sufficient demand from potential buyers, according to people familiar with the matter.
European buyout giant CVC oversees about US$165 billion of committed capital, according to its website, after raising a record buyout fund last year.
The company has invested in both high-profile brands as well as food and beverage producers before.
Its holdings have included the Formula One auto racing series, Swiss watchmaker Breitling AG, Indonesian snack maker GarudaFood and Czech brewer StarBev, according to its website.
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