Shares of Anglo-Dutch fast moving consumer goods (FMCG) major Unilever climbed to their highest in more than eight years on speculation that the world?s second-largest maker of food and detergent may combine with Colgate-Palmolive Co, the biggest maker of tooth paste. Unilever posted $25.81 billion gross profits on a turnover of $53.99 billion in 2006.
?There is a rumour from London that Colgate-Palmolive is interested in buying a stake or purchasing the entire company,? said Rik Zwaneveld, a trader at AFS Brokers BV in Amsterdam. A message left for Colgate spokeswoman Bina Thompson wasn?t immediately returned, while Rotterdam-based Unilever spokesman Tanno Massar declined to comment. In Mumbai, a spokesman for Hindustan Unilever Ltd (HUL), the Indian arm of the Unilever, said the company does not comment on market speculations.
Some analysts said the $54-billion Unilever would be the more likely acquirer. The Anglo-Dutch company has a market value of about 75 billion euros ($103.1 billion), about three times that of New York-based Colgate. Unilever?s personal-care products, such as Dove soap, account for about a quarter of its sales. Colgate had worldwide sales of $12.24 billion in 2006.
?I would expect it to be the other way around because of the market values of the two companies,? said Ton van Ooijen, an analyst at Kepler Landsbanki in Amsterdam.
?Unilever wants to expand its personal care operations, and Colgate has those activities.?
?From the Indian perspective, if this consolidation happens, it will be a win-win situation for both the companies with Colgate being the major beneficiary,? said Lalit Thakkar, director of research at Angel Broking in Mumbai. ? Also the shareholders will be benefited as the companies will see batter margins after consolidation,? Thakkar added.
Unilever stock rose as much as 4.9% in Amsterdam and was trading at 24.06 euros at 2.26 p.m. local time, set for its highest close since 1999. Its London-listed shares gained as much as 75 pence, or 4.6 %, to 1,722 pence. Shares of Colgate-Palmolive slipped 80 cents to $64.97 in Germany.