Unilever PLC, the Anglo-Dutch consumer products giant, is closing in on a deal to purchase Alberto Culver Co., maker of Alberto VO5 hair-care products, people familiar with the matter said. Precise terms of the deal couldn't be learned but Alberto Culver, based in Melrose Park, Ill., has a market value of $3.1 billion. With a typical takeover premium of 20% to 30%, it would fetch as much as $4 billion.
Alberto Culver's portfolio includes a number of well known hair care brands, such as TRESemme and Nexxus, in addition to Alberto VO5, and skin-care products such as St. Ives and Noxzema. The company, part owned by the family of founder Leonard Lavin and which dates its roots back more than 50 years, had sales of $1.4 billion in the last fiscal year, ended in September 2009.
Unilever currently sits on about $3.8B in cash and has a history of cash acquisitions. Should the story be accurate, I would expect that they would come t the debt market for around $2B in debt, an easy sale for the company given their risk profile, debt metrics and (ugh, cant believe I am saying it) ratings. Using an additional $2B in debt, we would get an adjusted debt to EBITDA (TTM for both companies) of 1.31x (up from 1.29x), which is easily manageable for their ratings. At 19x EBITDA, I would think this acquisition would be somewhat expensive.
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