What’s Going On Here?Companies have been sorting through their business units lately – and several are now taking the decision to cleave off those which no longer pass muster. What Does This Mean?Consumer staples giant Unilever – the (presumably frozen) brains behind Ben & Jerry’s ice cream – has been brewing up a sale of its global tea business since January. As with a similar spreads sale in 2017, several private equity investors are reportedly poised to make offers valuing the tea set at over $6 billion. Like rival Nestlé, Unilever will be hoping its overall business can expand faster once free of slower-growing segments.
Some forthcoming sales could be forced, however. The London Stock Exchange (LSE), for instance, may have to sell Borsa Italiana – the Italian rival it bought in 2007. That’s because regulators fear its $27 billion deal to take over market data provider Refinitiv would otherwise give LSE too much influence in the industry. A sale is one way to limit LSE’s power and help maintain healthy levels of competition. After all, Gryffindor haven’t won the Quidditch Cup since Charlie left… Why Should I Care?For markets: For buyers.
Companies compulsorily selling business segments can represent good value for buyers, since they may get away spending less than they otherwise would. In the current envirusment, that effect could perhaps be exaggerated by the sheer number of businesses under financial strain. Not all forced sales are bad for the seller, though: in LSE’s case, a Borsa Italiana sale may allow it to complete an acquisition that’ll bring much more value to the company.
The bigger picture: Not Slytherin, eh?
German automaker Volkswagen is reportedly considering a bid for $400 million car rental firm Europcar: that may be brave considering the bankruptcy that befell its transatlantic rival Hertz. Elsewhere, a SoftBank-backed software firm is said to be in the sights of patient industrial powerhouses Schneider and Emerson. And while not a traditional merger, a wise consortium of investors this week committed $10 billion to a gas pipeline business controlled by the Abu Dhabi National Oil Company – 2020’s biggest energy deal so far. | 