The EC’s investigation confirmed competition concerns in a number of deodorant markets, prompting the merging parties to offer to divest Sara Lee’s Sanex brand and related business in Europe.
Unilever’s deodorant business, which includes brands Dove and Rexona, already holds a strong market position, and there were concerns that its unification with Sara Lee’s Sanex brand, with which it presently competes against, would give it an unfair advantage.
Competition concerns
The EC found that the merger would raise competition concerns throughout Europe where it would remove an important competitive force and would likely have led to price increases.
“We had to ensure that the transaction would not lead to increased prices for consumers. As Unilever offered a strong and clear-cut remedy to address the competition concerns in a number of deodorant markets, the Commission was able to clear the merger,” said Joaquin Almunia, EC vice president of Competition Policy.
The merger has been given the all clear providing both parties are fully compliant with the commitment to divest the Sanex brand and its European business.
Purchase price adjusted
In light of this requirement, Unilever and Sara Lee have amended the share purchase agreement including an adjustment in the purchase price from €1.275bn to €1.210bn.
“We’re very pleased that this transaction has been approved and is nearing a close,” said Marcel Smits, interim CEO of Sara Lee.
“The change in proceeds will have no effect on our capital plans, as we continue with our plans to repurchase $2.5 to $3.0bn of shares by the end of fiscal 2012.”
The transaction is all part of Sara Lee’s ongoing process of divesting its international household and body care business to focus on the food and beverage market.
Unilever going from strength to strength
In contrast, Unilever is looking to strengthen its regional and local positions in personal care with the acquisition.
Unilever’s president of Western Europe, Doug Baillie, said: “Home and personal care is a key growth category and we are acquiring a number of leading brands that fill gaps in our portfolio, improve the stage of the European portfolio, while offering significant potential for development in other geographies.”
In addition to Radox, Duschdas and Neutral, the deal also includes Prodent and Zendium in the oral care category.