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Unilever’s investors lose N6.31bn as capital market reacts negatively to sale of firm’s tea business

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Unilever posts N4.224bn loss amidst revenue crunch

Unilever Plc is preparing for a dip in revenue after the company agreed to sell off part assets of its tea business, ekaterra, to CVC Capital Partners.

CVC Capital Partners has agreed to cough out €4.5 billion with the deal excluding debt liability.

The agreement deviated from Unilever’s initial plan to make the tea business standalone.

However, the sale of the unit will not be effective across all Unilever markets as India, Nepal, and Indonesia and its joint venture with Pepsi for Lipton ready-to-drink tea were excluded from the deal.

In a statement posted on its website, Unilever said the deal would be completed before the end of this year.

“Unilever to sell its Tea business, ekaterra, to CVC Capital Partners Fund VIII for €4.5 billion,” the company said.

Aside from the tea business, Unilever Nigeria has been drawing the curtain down on some of its ventures which include the spread segment, which was acquired by Sigma Silver Foods (Upfield Foods) Nigeria Limited.

The Nigerian subsidiary has also announced its intention to dispose of part of its facilities within the Home and Personal Care segment for N360 million by end of November.

The company had initially planned to complete the sale of the assets estimated at N262 million by June this year.

Unilever’s source of revenue is from its Foods Products [tea and savoury products; Lipton Yellow Label Tea and Knorr bouillon cubes, Glen Tea and Royco bouillon cubes] and Home & Personal Care [fabric care, household cleaning, skincare, and oral care products; Close-Up, Pepsodent, LUX soap, Lifebuoy soap, Vaseline lotion, etc].

Nigerian investors react negatively to sell of the tea business.

READ ALSO: Unilever to reduce Nigeria’s presence, sells cream, soap segment

The Food Products rake in N30.46 billion in the first nine months of this year.

The segment accounts for the largest share of Unilever Nigeria’s revenue, posting N34.10 billion compared to N27.84 billion generated by the Home and Personal Care brands in 2020.

But the Foods segment has been on a slow growth when compared to its performance in 2019 when it generated N31.78 billion.

The development has prevented the company from proposing dividends for shareholders in 2020 and 2019.

The tea brands, according to Unilever generated €2 billion in 2020.

Since the news of the sale of the tea segment was made public, the value of the company’s shares has dropped by 7.53 percent.

Unilever’s share price dropped from N16.60kobo to N13.5kobo per share on Thursday, costing shareholders N6.31 billion.

The negative sentiment has led to a decline in the company’s total investment from N83.87 billion to N77.55 billion as of Friday.

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