Unilever to buy Sara Lee unit for $1.9 billion

In the $1.87 billion deal, the maker of well-known brands like Dove soap and Axe deodorant hopes to expand its reach into other developing markets.

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NEW YORK (CNNMoney.com) -- Unilever PLC said Friday that it plans to buy Sara Lee's personal care unit for $1.87 billion in cash in an effort to boost its presence in Western Europe and in Asia.

Unilever (UL) is a major Anglo-Dutch consumer products maker that owns well-known brands like Dove soap and Axe deodorant.

"Personal care is a strategic category and a key growth driver for Unilever," said Unilever Chief Executive Paul Polman, in a statement. "The Sara Lee brands enjoy strong consumer recognition, offer significant growth potential and are an excellent fit."

The deal marks Unilever's largest purchase since 2000, when it bought Slim-Fast Foods for $2.3 billion and Ben & Jerry's for $326 million. That year it also acquired Bestfoods, the maker of Hellman's mayonnaise, for $21.3 billion.

The Sara Lee acquisition will be Polman's first since he was appointed CEO in October 2008. Unilever did purchase hair-care product maker Tigi for $411.5 million in January 2009, but that deal began under the previous CEO.

Unilever said it hopes to expand the newly-obtained brands in untapped developing and emerging markets, which already comprise about 15% of its annual sales.

The group of Sara Lee (SLE, Fortune 500) brands that Unilever is acquiring generated annual sales of $1.1 billion (€750 million) for the year ended June 2009, according to Unilever.

In a separate statement, Sara Lee said the sale should be completed in 2010.

Boosting Sara Lee's bottom line. Sara Lee Chief Executive Brenda Barnes, who took the helm of the Fortune 500 firm four years ago, has been outspoken about divesting assets. More than two-thirds of the company's profits come from overseas, and a stronger dollar in the first half of 2009 took its toll.

Sara Lee reported a quarterly loss of $14 million, or 2 cents per share, for the three-month period ended June 27 . But excluding items, the company beat analysts' expectations and with profit of 29 cents per share. The company also forecast a weak 2010 due to continued unfavorable foreign exchange.

Barnes has said publicly that Sara Lee is aiming for savings of more than $200 million over the next three years.

Sara Lee said Friday that it has "received significant interest in the remainder of its household business" and will continue to pursue sale options for those units. Those include air care, shoe care, insecticides and non-European cleaning brands.

Its board has authorized a $1 billion stock buyback program, and the company will maintain the current quarterly dividend of 11 cents. To top of page

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