Unilever unloads the bulk of its tea business for $5 billion
Unilever PLC has agreed to sell the lion’s share of its global tea business, ekaterra, to CVC Capital Partners Fund VIII for €4.5 billion – approximately USD $5 billion – concluding a process of reviewing and spinning off the division that took nearly two years.
ekaterra is the world’s leading tea business, with a portfolio of 34 brands including Lipton – the biggest tea brand in the world – PG tips, Pukka, T2 and TAZO. The business generated revenues of around €2 billion (circa $2.70 billion) in 2020, however, Unilever’s tea business has struggled for growth in recent years amid changing consumer tastes.
Alan Jope, CEO of Unilever PLC, announced in January 2020 that the company had initiated a strategic review of its global tea business amid the drop in the sales of standard black tea that Unilever cannot seem to find an answer to. Its premium tea and botanical/herbal tea businesses are performing much better.
Commenting on the sale, which was announced on 18 November, Jope said, “The evolution of our portfolio into higher growth spaces is an important part of our growth strategy for Unilever. Our decision to sell ekaterra demonstrates further progress in delivering against our plans.”
The transaction excludes Unilever’s Tea business in India, Nepal and Indonesia as well as Unilever’s interests in the Pepsi Lipton ready-to-drink tea joint ventures and associated distribution businesses.
Jope added, “We are proud of the place that our tea business has in our company’s history. We look forward to seeing ekaterra, with its strong brands and global footprint, prosper under CVC’s ownership. I would like to thank our tea colleagues around the world for their passion and commitment to our tea business and wish them well for the future.”
Pev Hooper, a managing partner at CVC Capital Partners said, “ekaterra is a great business, built on strong foundations of leading brands and a purpose-driven approach to its products, people and communities. ekaterra is well positioned in an attractive market to accelerate its future growth, and to lead the category’s sustainable development. We look forward to working with the team to realise ekaterra’s full potential.”
ekaterra will be sold to CVC’s Capital Fund VIII on a cash- and debt-free basis in a process that is expected to conclude in the second half of 2022 pursuant to certain regulatory approvals.