SUBSCRIBE

Breaking News on Cosmetics Formulation & Packaging in Asia-PacificEU editionUS edition

Headlines > Business & Financial

Read more breaking news

 

 

Unilever buys TIGI professional hair care business

By Guy Montague-Jones , 27-Jan-2009
Last updated on 27-Jan-2009 at 14:07 GMT2009-01-27T14:07:25Z

Unilever is buying the TIGI professional hair product business from the owners of Toni & Guy for $411.5m in cash.

The deal covers TIGI hair care brands such as Bed Head, Catwalk and S-Factor but does not include the Toni & Guy hairdressing salons.

Potential for expansion

Unilever has no experience in the premium salon business but has the infrastructure to expand the TIGI business and take its brands into new countries.

Commenting on the acquisition, Vindi Banga, Unilever President of Foods, Home & Personal Care, said: “We already have a strong position in daily hair care and adding the salon brands will further build our position in the hair category.

“We can bring our world-class R&D expertise to it and offer greater opportunity for geographical expansion.”

In a client note, Bernstein Research analyst Andrew Wood said: “We see strong potential for Unilever to expand this business and its brands into new regions based on Unilever’s global distribution capabilities.”

Wood also said that $411.5m was a good price for the TIGI business, which employs 550 people in America, Britain, Italy, Germany and Australia and achieved total sales of $250m in 2008.

Good market prospects

TIGI has also averaged 7 per cent top-line growth over the past few years and boasts operating profits in the 16-17 per cent range giving the business good prospects in the medium run, even if it may struggle in the current market conditions, added Wood.

Marking the arrival of Paul Polman as CEO, the acquisition is the first time Unilever has got its cheque book out for a significant takeover since BestFoods in 2000. In recent years, the Anglo-Dutch company has shown more interest in parting company with poorly performing businesses than picking up bargains.

Wood said: “We have argued in the past that Unilever needed to be more aggressive in acquisitions. This deal could signal an increased propensity to look for small bolt-on acquisitions.”

Although a departure from its ‘gun-shy’ phase, the acquisition is in line with Unilever’s stated goal of expanding its personal care business.

“It illustrates our determination to actively manage our portfolio in line with our stated strategic priorities, including a focus on personal care and higher growth areas,” said Banga.

Subject to regulatory approval, the deal is expected to be completed by the end of March 2009. Upon completion of the transaction, TIGI will operate as a stand-alone Global Business Unit within Unilever, reporting to Michael B. Polk, President of Unilever Americas.

Key Industry Events