Unilever Plc (ULVR.L) has agreed to sell its global tea business to CVC Capital Partners for 4.5 billion euros ($5.1 billion), concluding a process of reviewing and spinning off the division that took more than two years.
The business being sold, called Ekaterra, hosts a portfolio of 34 tea brands including Lipton, PG Tips, Pukka Herbs and TAZO and generated revenues of 2 billion euros in 2020.
Unilever will, however, retain its India and Indonesia tea operations as well as its bottled tea joint venture with PepsiCo (PEP.O).
Ekaterra will be sold to CVC’s Capital Fund VIII on a cash and debt free basis in a process that is expected to conclude in the second half of 2022, Unilever said in a statement on Thursday afternoon.
The Financial Times earlier reported on the sale.
“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,” Unilever’s CEO Alan Jope said.
The sale relieves Unilever of a business that has been a drag on earnings for several years as demand for black tea waned and consumer tastes changed.
Jope has been under some pressure to turn around Unilever as its stock languishes and it struggles to compete in the face of high inflationary costs, especially in emerging markets, its biggest source of revenue.
Jope’s plan is to focus on higher growth areas such as plant-based foods, nutrition and premium beauty to boost sales growth.
The company last month reported stronger-than-expected quarterly organic sales but warned that inflationary pressures would only worsen in 2022.
Unilever’s shares were marginally lower in late afternoon trading. ($1 = 0.8814 euros)