Unilever sells N.American laundry unit to Vestar

By David Jones

LONDON (Reuters) - Consumer goods giant Unilever agreed to sell its North American laundry business on Monday to private equity firm Vestar Capital Partners for about $1.45 billion (730 million pounds) to complete the bulk of its sell-off programme.

The business makes Snuggle, Wisk and Surf products and the Anglo-Dutch company had been looking to sell it for almost a year in its struggle to compete as a distant No. 2 behind archrival Procter and Gamble (P&G) (PG.N).

Vestar intends to fold the business into its Huish Detergents operations and re-name it Sun Products, thus moving to No. 2 from third in the North American market and gaining scale needed to compete against Tide-maker P&G.

"We were sub-scale in North America, and saw bigger opportunities to invest elsewhere in Developing and Emerging (D&E) markets and also in Europe," Keith Weed, Unilever's vice president for Home Care told Reuters.

Unilever is the clear number one laundry player in D&E markets, and equal number two with Germany's Henkel (HNKG_p.DE) in Western Europe, both behind P&G.

Unilever shares rose 2 percent to 14.92 pounds by 10:20 a.m. in a largely flat London stock market.

"Given the length of the disposal process and poor retail volume trends in the business concerned, we view around 1.4 times sales and around 9 times estimated EBITDA (core earnings) as a good exit price," said analyst Jeff Stent at brokers Citi.

He added that the disposal will further fuel expectations that Unilever will use its first-half results on July 31 to increase its 2008 share buyback guidance currently of at least 1.5 billion euros. Stent is looking for 2.4 billion euros.