Unilever to Buy Helene Curtis for $915 Million
Unilever said Wednesday that it will buy Helene Curtis for $915 million in a deal that would add shampoos and deodorants to Unilever’s lineup of consumer products and make it a stronger rival to industry giant Procter & Gamble.
Chicago-based Helene Curtis, which would keep its name, has two-thirds of the U.S. market for hair-care products, deodorant and skin-care products. Its brands include Finesse, Salon Selectives, Suave and Quantum.
Anglo-Dutch Unilever, one of the world’s largest consumer-products companies, manufactures personal-care products, food, beverages and detergents. Pond’s, Organics, Sunsilk, Rexona, Vaseline and Mentadent are among its brands.
Unilever’s subsidiaries include Thomas J. Lipton, Good Humor-Breyer’s Ice Cream, Gorton’s, Calvin Klein and Elizabeth Arden.
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Helene Curtis is the second U.S. beauty products maker targeted this year by a foreign rival with deeper pockets. Memphis, Tenn.-based Maybelline Inc. agreed to a $762-million offer from French rival L’Oreal last month.
The Unilever announcement comes just a month after Shamrock Holdings Inc., a Burbank investment manager for the Disney family’s 7.6% stake in Helene Curtis, sent a letter urging the company to consider being bought out.
Clifford Miller, managing director of the Burbank company, said the letter was prompted by the firm’s poor performance and partly by talks surrounding the recent purchase of Maybelline.
“The values were quite strong,” Miller said. “We thought similar potential was available to Helene Curtis.”
According to corporate bylaws, Helene Curtis directors can only consider abolishing the Gidwitz family’s controlling stake in the company once every five years. This year, Jan. 1 to June 30 is the appointed time to make such a change.
“The Helene Curtis directors are to be commended for acting prudently and appropriately to maximize the intrinsic value of the company’s assets for the benefit of its shareholders,” said Stanley Gold, Shamrock’s president.
Unilever would pay Helene Curtis $70 a share in cash and assume $145 million in debt.
The deal, which is subject to regulatory approvals, is expected to be completed by the end of March. Ronald Gidwitz will keep the chief executive spot at Helene Curtis.
Helene Curtis stock, which had surged earlier after Shamrock’s letter, rose $10.375 to $69.375 on the New York Stock Exchange on Wednesday. Unilever’s $70-a-share offer represents a 19% premium over Helene Curtis’ closing price Tuesday of $59 a share.
The Helene Curtis-Unilever deal would lead to further consolidation in the industry as price wars force other companies to find ways to reduce costs and become more competitive, said Prudential Securities Research analyst Bonita Austin.
Some beauty companies have sought other ways to come up with cash to compete more effectively. U.S. cosmetics maker Revlon Inc. said recently that it would sell shares to the public. Competitor Estee Lauder Cos. sold public shares last year.
Analysts say Helene Curtis and Unilever will complement each other well and will both benefit from the deal.
“Helene Curtis benefits because the shares are going to go at $70 versus the $30 they were trading at before all this acquisition talk arose,” said Douglas Lane, an analyst at Merrill Lynch. And “Unilever gets to pick up some very attractive brands in a category in which they have been underrepresented.”
Though Lane said he does not expect to see any immediate impact on the industry, the merged company would give industry leader Procter & Gamble a run for its money.
Procter & Gamble makes such diverse products as Ivory soap, Head & Shoulders shampoo, Tide detergent and Folger’s coffee.
“Now they have a competitor with deeper pockets,” he said.
Shamrock’s Miller said, “It’s a match made in heaven.” Helene Curtis’ “products will now have real marketing muscle behind them,” he said.
On Wednesday, Shamrock sold the 514,600 shares of Helene Curtis stock it has owned since 1994. While Miller declined to disclose the average cost of the stock, he said Shamrock considered the deal “an enormous Valentine.”
Associated Press contributed to this report.
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Helene Curtis at a Glance
* Headquarters: Chicago
* Chief executive: Ronald J. Gidwitz
* Major products: The company manufactures hair- and skin-care products, deodorants and beauty salon appliances under such brand names as Suave, Finesse and Degree.
* 1995 revenue: $1.3 billion
* 1995 profit: $19.2 million
* Earnings per share: $2.02
* Wednesday stock price: $69.375, up $10.375
Source: Bloomberg Business News
Researched by JENNIFER OLDHAM / Los Angeles Times
