Unilever to Sell Lipton Tea to CVC Capital for $5 Billion
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Unilever PLC has agreed to sell the bulk of its tea business to CVC Capital Partners for €4.5 billion, equivalent to more than $5 billion, the consumer-product giant’s latest move to jettison slower-growing parts of its business. Unilever is currently the world’s largest tea maker, with brands including Lipton, Brooke Bond and PG Tips brands. On Thursday, Unilever announced the sale of the tea business was part of its broader strategy to focus its portfolio on higher-growth categories. The company has come under pressure of late to revive growth, with its share price falling over the past year and analysts saying it has underperformed rivals during the pandemic in areas such as hygiene and packaged food. The company, which owns Dove soap, Hellmann’s mayonnaise and Ben & Jerry’s ice cream, has in recent years sought to accelerate growth by buying up a range of businesses in on-trend categories. Those have included plant-based foods brand Vegetarian Butcher, healthy snacks maker Graze, and a string of upscale skin care and vitamins brands. The tea business being sold to CVC generated revenue of about €2 billion last year, roughly level with the prior period. Tea revenues make up close to 4% of Unilever’s overall sales. CVC will take control of 34 tea brands, 11 factories and Unilever’s tea estates in three countries. However, Unilever is keeping its tea business in India, Nepal and Indonesia, where the Lipton brand is popular, and retaining its ready-to-drink ice tea joint venture with PepsiCo Inc.
The SMI lost 0.4 percent to 12,553 points. Among the 20 SMI stocks were 14 price losers and six winners. 31.45 (previously: 33.1) million shares were traded. The building materials producer Holcim has set new financial and sustainability targets as part of its Strategy 2025. Stock market participants seemed unconvinced, with the share losing 2.3 percent. Zurich Insurance shed 1.1 percent. Banking stocks were under pressure after U.S. market interest rates fell sharply the previous evening. UBS lost 1.7 percent and Credit Suisse 1.8 percent. Watch exports from Switzerland accelerated in October. However, exports to the crucial Chinese market have decreased. Richemont reacted with a discount of 0.1 percent, Swatch gained 0.4 percent. Pressure on the market came from the two pharmaceutical giants Novartis and Roche (-0.6% each).
European equity markets retreated Thursday as investors paused after a string of six consecutive sessions of gains. The Stoxx Europe 600 index gave up 0.5 percent to 487.7 points, after reaching a high of 489.95 points at the close Wednesday. In Paris, the CAC 40 and the SBF 120 dropped 0.2% and 0.3%, respectively. In Frankfurt, the DAX 40 was down 0.2% while the FTSE 100 was down 0.5%. Vallourec (-14.4%) lowered its financial targets for 2021 and announced further cuts in its European activities with a plan to sell its activities in Germany. Oil and gas stocks declined, penalized by the fall in oil prices on Wednesday. In Paris, CGG dropped 5.3%, TechnipFMC gave up 4.1% and Rubis dropped 3.3%. In London, Shell dropped 1.7% and BP 1.6%. Valneva (+2.5%) adjusted its financial outlook for 2021 after posting revenue growth of close to 19% in the first nine months of the year, excluding the Covid program. Shares of Thyssenkrupp climbed 6.3% after the industrial conglomerate said its earnings were boosted by the rise in steel prices. In addition, the group announced that it would float its hydrogen division, Uhde Chlorine Engineers, in the spring of 2022. German car parts manufacturer Continental declined 3.1% after its board fired its chief financial officer.
The S&P 500 ticked up 15.87 points, or 0.3%, to 4704.54, its 66th record close of the year and reversed Wednesday’s decline. The Nasdaq Composite Index also rose to an all-time high, gaining 72.14 points, or 0.5%, to 15993.71. The Dow Jones Industrial Average slipped 60.10 points, or 0.2%, to 35870.95. Shares of Macy’s surged $6.53, or 21%, to $37.37 and Kohl’s jumped $6, or 11%, to $62.48 as both retailers released earnings that beat analysts’ estimates and raised their full-year guidance. U.S.-listed Alibaba shares declined 11% after the Chinese e-commerce giant reported a drop in quarterly profit due to losses from its investments in equities. Technology firm Nvidia rose $24.14, or 8.3%, to $316.75 after posting record quarterly revenue. Cisco Systems slid $3.13, or 5.5%, to $53.63 after the company gave earnings guidance that was below Wall Street’s estimates and said it was affected by the semiconductor shortage. Electric-vehicle makers Rivian Automotive and Lucid Group extended losses into a second day. The stocks fell 16% and 10%, respectively. Sweetgreen made its market debut Thursday, as investors consider how the lunchtime salad chain will operate with workers slowly returning to offices. Shares rose $21.50, or 77%, to $49.50. The latest unemployment data showed 268,000 people filed for jobless claims in the week ended Nov. 13, a decline from the previous week.
In Asia, major indexes broadly closed with gains. An exception is Hong Kong, where the HSI drops by 1.8 percent. In Hong Kong, the focus is on the real estate share Country Garden Services and the technology share Alibaba. Country Garden Services, like various other Chinese real estate companies struggling with liquidity problems, needs cash and increases the capital by the equivalent of about 1 billion dollars. The share price buckles by more than 11 percent in response. China Evergrande Group said it planned to sell its stake in a Hong Kong-listed film production company, its latest move to generate cash to pay off its debts. It will incur a loss equivalent to around $1.1 billion from the transaction. Alibaba shares, which had already been very weak the previous day in the run-up to the presentation of the financial figures, lost a further 10.3 percent. In Tokyo, the Nikkei index gained 0.4 percent to 29,715 points, and in Seoul, after three trading days in a row with losses, the Kospi gained 0.6 percent. A rally at LG Electronics (+7.8%) also contributes.
The 10- and 30-year U.S. Treasury yields posted their biggest two-day drops in over a week amid a continued rally in government bonds, as traders continued to focus on the impact that persistent inflation may take on the U.S. economy. The 10-year U.S. Treasury yield contracted by 2 basis points to 1.586%. The yield on the 10-year German Bund was -0.273%, down from -0.243% Wednesday night.
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