Unilever (UNA) has said goodbye to its Ragu and Bertolli pasta sauce business, agreeing to unload it to Japanese food manufacturer Mizkan Group for about $2.15 billion, as the Dove skin cream maker continues to sell or disband food brands.
The deal transfers Ragu, the best-selling US pasta sauce that helped popularise Italian food in America, into the hands of a closely held Asian company founded 210 years ago. Together, the brands have annual sales of more than $600 million, London and Rotterdam-based Unilever said in a statement.
The purchase will allow Mizkan to get a majority of its revenue from abroad, compared with 34 percent in the year through February, Misato Kimata, a spokeswoman said.
Ragu holds 27 percent of the sauce market in the US, according to Euromonitor. Campbell Soup Co.'s Prego brand is second with 18 percent. Bertolli is the second-largest brand in the US premium pasta sauce market, Mizkan said.
Unilever will continue to sell pasta sauces under the Raguletto brand in Finland, South Korea and other countries, and under the Knorr brand in Europe.
Under Chief Executive Officer Paul Polman, Unilever has focused on its health and beauty business while selling slower-growth food brands, mainly in the US. For Mizkan, the deal is its largest ever and will enhance its North American exposure, which has been growing via acquisitions to reduce its reliance on a shrinking population in Japan.
"The deal is the tip of the iceberg of upcoming Japanese food and beverage makers' outbound acquisitions to counter slowing domestic demand," said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo.
Unilever's food unit, which does not include its tea and ice cream business, accounted for 35 percent of sales in 2008, the year before Polman took the helm. Today, it's 27 percent.
"This sale represents one of the final steps in reshaping our portfolio in North America," Kees Kruythoff, president of Unilever's business in that region, said in a statement. Unilever is still looking to sell its Slim-Fast diet food business, which it placed under review along with the pasta brands earlier this year.
Unilever said it expects to conclude the transaction by the end of June. Part of the proceeds will go to its £715 million ($1.2 billion) acquisition of share rights left in family trusts by one of the company's founders nearly a century ago, which simplifies its stock structure, spokeswoman Lucila Zambrano said.