Global Biz
EU probes Unilever takeover of Sara Lee unit
(Agencies)
Updated: 2010-06-01 17:31
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BRUSSELS - European Union regulators said Tuesday they will closely investigate Unilever's euro1.28 billion bid for Sara Lee Corp's personal care business because they think the deal could give the new company too much power in some markets.
This delays the deadline for EU regulatory approval of the deal until October 5 and could potentially force Unilever to make changes -- such as selling some units -- in order to soothe regulators' concerns.
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It will also buy several strong regional brands such as Radox bubble bath and Switzal, a maker of baby shampoo.
The European Commission says the deal would create a clear market leader in some European countries and remove a strong alternative supplier for deodorants, skin cleansing and fabric care products.
The EU executive checks large deals to make sure a company doesn't gain so much control over a market that it no longer faces much real competition and can hike prices or choke supplies without any challenge.
"The Commission will carefully scrutinize whether the proposed transaction would ultimately lead to higher prices for final consumers," the EU said.
Unilever says the businesses it will acquire had sales of euro750 million and operating earnings of euro128 million in the 12 months ending in June.
Unilever, the world's third-largest consumer products company after Procter & Gamble Co and Nestle SA, says its Dove, Axe and Rexona lines will complement the Sara Lee brands.
The deal would be the largest purchase for the company since its $2.6 billion acquisition of Ben & Jerry's in 2000, and the first initiated under new CEO Paul Polman.
EU regulators said their investigation was separate from a parallel examination of Procter & Gamble's bid for Sara Lee air fresheners. The EU has set a deadline of June 17 to approve the deal or deepen its probe.
Sara Lee is selling off the businesses to concentrate on food and beverages.