LONDON – Mizkan Group has agreed to buy Unilever’s Ragu and Bertolli pasta sauce brands for $2.15 billion as Japanese companies continue to diversify by acquiring Western assets.
The all-cash deal, which values the sauce business at 3.6 times its annual sales, boosts the Japanese condiments maker’s presence in North America’s grocery aisles as declining birth rates and an aging society stifle growth at home.
The companies announced the deal on Thursday after Reuters reported late Wednesday that the parties were in advanced talks, nearly a month after Unilever said it was weighing options for the sauces business and for its struggling Slim-Fast brand.
The sale of those operations, plus the recent disposals of Skippy peanut butter and Wishbone salad dressings, will complete the restructuring of Unilever’s North American portfolio, the company said, as the group sharpens its focus on its most profitable products.
Unilever, which still owns food brands such as Ben & Jerry’s ice cream, Knorr soups and Hellman’s mayonnaise, also has margarine and spreads brands in its portfolio, including Flora and Becel. These, however, have been hurt by a shift in consumer tastes away from chemical ingredients, leading some analysts to suggest that they, too, could be sold.
Deutsche Bank analyst Harold Thompson said he expects Unilever to continue to make modest food disposals, though he did not name specific brands.
“The key is for the dilution of this disposal strategy to be offset by the enhancement of acquisitions in (home and personal care) markets for it to be a success over the long term,” Thompson said.
Unilever has been vocal about its desire to focus more on personal care brands, which enjoy higher margins and growth in emerging markets.
“Food is in the doldrums in mature markets,” one consumer analyst said.
Thursday’s deal also marks another step in the simplification of Unilever, with the company created by the 1929 merger of English soap company Lever Brothers and Dutch margarine company Margarine Unie saying this week that it was buying out the rights of its cofounder’s family trusts.
For Mizkan and rival Asian groups, however, the deal steps up a shift toward Western markets, spurred by slowing domestic growth and cash-heavy balance sheets.
Mizkan already had Britain’s Branston Pickle and Sarson’s vinegar in its growing larder and fellow group Suntory Holdings closed a $16 billion takeover of U.S. bourbon company Beam Inc. last month, following last year’s agreement by Suntory Beverage & Food to buy British drinks Lucozade and Ribena from GlaxoSmithKline.