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Unilever won't bid for Sara Lee's food brands, ING says
Bloomberg News
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Published: 10/5/2010 8:21 AM | Updated: 10/5/2010 11:49 AM

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Unilever, the world's second-largest maker of consumer goods, will not bid for Sara Lee Corp.'s food brands, according to Marco Gulpers, an analyst at ING Groep NV.

"We do not believe Unilever would be interested in the food portfolio of Sara Lee," Gulpers wrote in a note today. "Although the coffee business might have some appeal, this would be an entirely new category for them."

Sara Lee shares jumped the most in two years after the New York Post newspaper reported yesterday the Downers Grove, Illinois-based company rejected a $12 billion unsolicited leveraged buyout offer from KKR & Co and that Unilever could be interested in the company, excluding its bakery business.

The maker of packaged bread, meat and coffee held takeover talks with private-equity firm Apollo Global Management LLC without reaching a deal, according to people with knowledge of the situation.

"Consumer companies can be attractive to buyout firms because they're big cash generators and have strong brands," Gulpers wrote. "A bid now might be opportunistic for private equity," as Sara Lee cuts debt.

Sara Lee has sold some of its units to focus on food and is seeking to dispose of its North American bakery business, which faces increasing competition from less expensive store brands. Unilever agreed to buy Sara Lee's body-care unit last year, gaining brands including Sanex and Radox.

Bolt-On Acquisitions

Unilever's Chief Executive Officer Paul Polman has earmarked one to two billion euros a year for the Rotterdam- and London-based company to make so-called "bolt-on" acquisitions to help drive it toward a goal of doubling sales. The company announced Sept. 27 it would buy Alberto Culver Co. for $3.7 billion to add haircare brands including VO5 and TreSemme. Paul Matthews, a spokesman for Unilever, declined to comment on whether it would bid for Sara Lee.

"I just don't see it happening," Gulpers said today in a phone interview. "It basically doesn't fit into their strategy." Gulpers has a "hold" rating on Unilever's shares, with a target price of 24 euros.