Glenboden M & A Originations

Who is most likely to acquire Boursin from Unilever ?

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Origination Status sale intention announced of business unit and brand;
Asset Boursin (France), legacy French fresh cheese brand;
Buyer candidates include Lactalis, Bongrain, Groupe Bel and Dairy Crest;
Seller Unilever (UK /Holland), multinational FMCG group;
Buyer Rationale acquisition of leading international brand in its category, synergies;
Seller Rationale portfolio restructuring, exit from non -core businesses;
NBs Boursin is the only significant cheese brand remaining in Unilever’s portfolio.
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It’s not hard to see why Unilever wants to sell Boursin, in the context of its general restructuring and honing down of its portfolio. Within France’s triumvirate of big cheese groups, Lactalis is the most likely buyer. But Dairy Crest might spoil the party for Lactalis. Although much smaller, and historically focused on the UK market, Dairy Crest has a proven strategy of expansion into continental Europe. It's also prepared to pay a full price for a strong brand, unlike e.g. Lactalis.

Boursin could lay claim to being the original spreadable fresh cheese. Established by a genuine French artisan in 1957, Boursin was the first French cheese to be advertised on French television, and was acquired by Unilever in 1989.

Boursin had already become a commercially -produced cheese, before Unilever bought it; but the group’s big success was to internationalise it. Now sold in 35 countries, in five continents, it is arguable the most global brand in its category, even if its annual sales were only €95 mln in 2006.

Clearly it presents a very attractive platform, for companies with global ambitions in the premium, chilled fresh cheeses cabinet.

But who will buy Boursin ? Within France’s triumvirate of big cheese groups, Lactalis is the most likely candidate. Bel is arguably too focused on portioned or melted cheese, and Bongrain does not have the growth or acquisitions momentum that Lactalis has now.

What’s more, Lactalis would surely love to have an international French fresh cheese brand, to complement its President in soft cheese, Societe in aged cheese and Galbani in Italian fresh cheese.

But Dairy Crest might spoil the party for Lactalis. Although much smaller than Lactalis, and historically focused on the UK market, Dairy Crest is a € 2 bln chilled dairy business with a strategy of expansion into continental Europe. It took its first step last year, when it acquired St. Hubert and Valle, leading spread brands in France and Italy respectively (non –cheese), from Uniq.

Reports suggest that Dairy Crest is happy with the St Hubert acquisition, with its market share growing in France. Boursin would broaden the portfolio in France, and provide a platform for the group’s European expansion plans, since half of Boursin sales are outside France, mostly in Europe. At the same time, the group would not have to venture beyond France in manufacturing terms.

But would Dairy Crest outbid Lactalis ? Look at what both groups have paid for previous acquisitions. Dairy Crest paid an EBITDA multiple of 11,1 for St Hubert. Not too much, but that translates into a staggering Sales multiple of 3,9, because of the brand’s high margins.

Anything owned by Unilever, even if they’re selling it, is also likely to have a high margin, certainly in incremental terms, so chances are that Boursin’s price will also be very high in Sales multiple terms.

By contrast, since the Galbani deal, in early 2006, Lactalis has made a string of acquisitions in France, USA, Czech Republic and Croatia. Only in the case of Dukat in Croatia can the price be estimated – at only x1,1 Sales.

As the St. Hubert case proves, Dairy Crest is a public company, that understands that profitability is akin to shareholder value, and that sales revenue is not.

In contrast, Lactalis is a private company, with no shareholders to provide value to, that likes to measure its success by how many employees and factories it has around the world. It’s noteworthy that Lactalis was not among the bidders for St. Hubert, probably because it was too expensive for them.

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