In a deal worth EUR 4.5 billion (USD 5.1bn) on a cash-free, debt-free basis, Unilever sells it’s world’s leading tea business to American-British private equity firm CVC Capital Partners. The business being sold is called ekaterra and consists of 34 brands including Lipton, PG tips, Pukka, T2 and TAZO®. The business generated revenues of around EUR 2 billion (USD 2.3bn) in 2020.
The transaction perimeter excludes Unilever’s interests in Pepsi Lipton, a joint venture between Unilever and PepsiCo established in 1991 to manufacture and sell ice tea branded products around the world. Core Brands are Lipton Ice Tea, Brisk and Pure Leaf.
Also excluded is Unilever’s tea business in India, Nepal and Indonesia.
The tea business has been a drag on earnings for many years because of a change in consumer tastes associated with decreasing demand for black tea. When Unilever’s CEO Alan Jope took office in January 2019, he started a review of all areas of the business of the British multinational consumer goods company that is headquartered in London, England.
“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,” Jope was quoted in a statement the company published today.
“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,” he said.
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.”
John Davison, CEO of ekaterra, said: “ekaterra is a strong business with positive momentum and has an exciting future ahead under the new ownership of CVC. We look forward to the next stage of our journey as the world’s leading tea business.”
Completion of the transaction is subject to completion of works council consultation processes and the receipt of certain regulatory approvals. Completion is expected in the second half of 2022.