* Mizkan Group looks to counter slowing domestic growth
* All-cash deal values sauce business at 3.6 times sales
* Unilever restructuring close to completion
(Adds deal advisers)
By Martinne Geller and Paul Sandle
LONDON, May 22 Mizkan Group has agreed to buy
Unilever's Ragu and Bertolli pasta sauce brands
for $2.15 billion, continuing a trend for Japanese consumer
goods companies diversifying through Western assets.
The all-cash deal, which values the sauce business at 3.6
times its annual sales, boosts the Japanese condiments maker's
presence in North America's grocery aisles as declining birth
rates and an ageing society stifle growth at home.
The companies announced the deal on Thursday after Reuters
reported late on Wednesday that the parties were in advanced
talks, nearly a month after Unilever said it was weighing
options for the sauces business and for its struggling Slim-Fast
The sale of those operations, plus the recent disposals of
Skippy peanut butter and Wishbone salad dressings, will complete
the restructuring of Unilever's North American portfolio, the
company said, as the group sharpens its focus on its most
Unilever, which still owns food brands such as Ben & Jerry's
ice cream, Knorr soups and Hellman's mayonnaise, also has
margarine and spreads brands in its portfolio, including Flora
and Becel. These, however, have been hurt by a shift in consumer
tastes away from chemical ingredients, leading some analysts to
suggest that they, too, could be sold.
Deutsche Bank analyst Harold Thompson said he expects
Unilever to continue to make modest food disposals, though he
did not name specific brands.
"The key is for the dilution of this disposal strategy to be
offset by the enhancement of acquisitions in (home and personal
care) markets for it to be a success over the long term,"
Unilever has been vocal about its desire to focus more on
personal care brands, which enjoy higher margins and growth in
"Food is in the doldrums in mature markets," one consumer
Thursday's deal also marks another step in the
simplification of Unilever, with the company created by the 1929
merger of English soap company Lever Brothers and Dutch
margarine company Margarine Unie saying this week that it was
buying out the rights of its co-founder's family trusts.
For Mizkan and rival asian groups, however, the deal steps
up a shift towards Western markets, spurred by slowing domestic
growth and cash-heavy balance sheets.
Mizkan already had Britain's Branston Pickle and Sarson's
vinegar in its growing larder and fellow Japanese group Suntory
Holdings closed a $16 billion takeover of U.S.
bourbon company Beam Inc last month, following last year's
agreement by Suntory Beverage & Food to buy UK drinks
Lucozade and Ribena from GlaxoSmithKline.
But it's not only the Japanese that are hungry for more.
Emperador Inc of the Philippines agreed this month
to buy Scotch whisky company Whyte & Mackay from United Spirits
, and China's Bright Food Group said on
Thursday that it would buy control of Tnuva, Israel's largest
food company, from private equity firm Apax.
Mizkan, which says it is the world's leading provider of
rice wine vinegar, already owns U.S. cooking wine brand Holland
House and Border Foods, which makes Mexican sauces and peppers.
The pasta sauce business gives it additional annual turnover
of more than $600 million and the leading brand in a market with
annual sales of $2.3 billion.
Goldman Sachs acted as financial adviser to Mizkan,
with Shearman & Sterling LLP and Mori Hamada & Matsumoto serving
as legal advisers. Unilever was advised by Morgan Stanley
and law firm Cravath Swaine & Moore LLP.
The deal is expected to close by the end of June and is
being financed by the proceeds of a new fully committed
Unilever shares slipped 0.7 pct to 26.75 pounds by 1339 GMT.
(Additional reporting by Soyoung Kim in New York; Editing by