British fast-moving consumer goods company Unilever plc (GB:ULVR) has decided to sell its non-core beauty unit Elida Beauty to American private equity firm Yellow Wood Partners for an undisclosed sum. Unilever confirmed the receipt of a binding proposal from Yellow Wood on December 18. The deal, subject to certain regulatory conditions, is expected to close by mid-2024.
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The FTSE 100-listed company operates five core units: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream. It boasts brands such as Dove, Knorr, Lifebuoy, Axe, Sunsilk, Lux, and Ben & Jerry’s. Elida Beauty hosts more than 20 beauty and personal care brands, including Q-Tips, Caress, Timotei, and Tigi. The business contributed roughly €0.8 billion in revenue in 2022.
Yellow Wood Partners invests primarily in the consumer goods sector, and thus, Elida Beauty seems a good fit for the investment firm.
Unilever Prioritizes its Brand Portfolio
Reports suggest that Unilever has been seeking a probable buyer for Elida Beauty since last week, and Yellow Wood emerged as the winner. The persistent inflationary environment and high interest rate scenario have impacted Unilever’s performance. The company intends to focus on its 30 core brands that contribute approximately 70% of its revenues.
Unfortunately, Elida Beauty did not fit that description and had to be divested. Earlier this year, Unilever sold another non-core brand, Suave, to Yellow Wood. In its latest results for the three months ended September 30, 2023, Unilever’s underlying sales grew 5.2%, on the heels of softening inflation and a revamp in consumer spending. For the full year of Fiscal 2023, underlying sales are expected to grow by more than 5%.
Is Unilever a Buy or Sell?
On TipRanks, ULVR stock has a Hold consensus rating based on three Buys, four Holds, and four Sell ratings. The Unilever plc share price target of 4,018.18p implies 7.3% upside potential from current levels. Year-to-date, ULVR shares have lost 7.4%.
