It does not seem like it was all that long ago that Anglo-Dutch consumer products giant Unilever (NYSE:UL) (NYSE:UN) was slimming down, centralizing and cutting its product portfolio. Nevertheless, Unilever has decided that it is time to get a little bigger again, and the company is buying Alberto-Culver (NYSE:ACV), a hair and skin care specialist, in an all-cash deal.
The Terms
Unilever is proposing to pay $3.7 billion in cash, or $37.50 per share. That is a rather healthy premium for Alberto-Culver. Even granting that the spin-off of Sally Beauty Holding (NYSE:SBH) makes past cash flow performance less predictive, investors have to make some rather exceptional profitability improvement assumptions to make Unilever's price seem sound. On the other hand, this deal will meaningfully expand Unilever's market share and there are solid reasons to think that Unilever's marketing machine will do more to grow Alberto-Culver's brands and international exposure than the company did on its own.
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