Two of the world’s biggest private equity groups have joined forces to assemble a knockout takeover bid for the £6bn Unilever division which houses the Flora margarine brand.
Sky News has learnt that Clayton Dubilier & Rice and Bain Capital have begun working together on an offer for the Anglo-Dutch consumer goods group’s spreads business, which it has outlined plans to offload.
CD&R and Bain’s partnership is the first significant bidding group to emerge after months of speculation about the likely participants in an auction of the unit, which also holds the I Can’t Believe It’s Not Butter brand.
Sources said that CD&R’s interest would lean heavily on Vindi Banga, a former Unilever foods executive, and Sir Terry Leahy, the former boss of Tesco – both of whom are already closely involved with the buyout firm.
Bain, meanwhile, has significant experience of carving out complex business units from large multinationals, having reaped huge gains from its role in acquiring Worldpay, the payments business, from Royal Bank of Scotland.
Other consortia are expected to form over the summer as Unilever gets ready to sell the business, although it could opt to dispose of it through a demerger to its existing shareholders if offers are not sufficiently attractive.
Video: Flora’s owner targets savings alongside sale
Announcing half-year results last week, Paul Polman, Unilever’s chief executive, said preparations for an auction were “well underway”.
The intention to sell or demerge the spreads division came two months after Unilever was the subject of an unsolicited £115bn takeover approach from Kraft Heinz, the US-headquartered food giant.
The move from Kraft Heinz sparked a hostile reaction from the Unilever board and rang alarm bells in Downing Street, where Theresa May had vowed to clamp down on unwanted foreign takeovers.
Mr Polman, who said last week that Unilever was becoming a “more resilient, more competitive and more profitable” company, had called for a “level playing field” in response to the Kraft Heinz approach.
He later insisted that he was not calling for the Anglo-Dutch fast-moving consumer goods group to receive special protection from the Government.
In recent months, Unilever has been linked to a bid for the £3bn food unit of Reckitt Benckiser, which it agreed to sell last week to McCormick’s of the US.
Mr Polman has also turned to faster-growing categories for takeover opportunities, snapping up the online-based Dollar Shave Club for $1bn last year.
The spreads category has been in long-term decline as increasingly health-conscious consumers have turned to butter-based products.
That trend reinforces the likelihood that an eventual buyer of the Unilever unit will be steeped in industry expertise, and the Bain-CD&R consortium is said to have lined up a slate of industry executives to work on its business plan.
Neither Bain nor CD&R could be reached for comment on Tuesday.