DBRS Comments on the Sale of Unilever Group’s North American Laundry Business

DBRS notes that the A (high) / R-1 (low) ratings of Unilever Group (Unilever or the Company) remain unchanged following today’s announcement that the Company will sell its North American laundry business to private equity firm Vestar Capital Partners (Vestar) for $1.45 billion in cash and preferred shares. The transaction is consistent with Unilever’s previously announced plan to divest non-strategic businesses, generating approximately EUR 2.0 billion in revenue and was already factored into DBRS’s current ratings and Stable trend (see DBRS report dated October 10, 2007).

The assets being sold include the Company’s all®, Snuggle®, Wisk®, Surf®, and Sunlight® brands in the United States, Canada and Puerto Rico, as well as a manufacturing plant located in Baltimore, Maryland. Although these businesses have performed well, generating $1.0 billion in revenue in F2007, they are slower growth and relatively smaller scale when compared to the Company’s laundry businesses outside of North America. DBRS notes that Unilever’s global laundry business generated approximately EUR 5.0 billion in sales in F2007. The sale will allow the Company to continue its focus of increasing investment in higher-margin, higher-growth businesses and regions.

Given the relative size of the business, DBRS does not believe the divesture will materially affect the Company’s earnings profile. While the Company has not commented on the planned use of proceeds ($1.075 billion in cash), DBRS continues to expect that the funds will be used for increased levels of share repurchases and/or dividends as opposed to debt reduction. DBRS believes leverage may increase slightly as a result; however, the Company’s credit metrics will continue to remain comfortably within the current rating category.

DBRS notes that Vestar will merge the acquired brands with its existing laundry business, forming a new company named The Sun Products Corporation (Sun). As part of the deal, Unilever will also receive warrants for up to 2.5% of Sun’s common equity.

Note: This rating is based on public information.