Unilever offloads tea business for $7bn

Unilever has sold its global tea business, ekaterra, to private equity company CVC Capital Partners Fund VIII for $7 billion on a cash-free, debt-free basis.

Ekaterra has a portfolio of 34 brands including Lipton, PG Tips, Pukka, T2, and TAZO. In 2020, its revenue was $3.1 billion.

Unilever first flagged selling its tea business in January 2020 after releasing its CY19 results. Its tea market had seen the slowest growth rate in a decade and finance head Graeme Pitkethly said all options for the business would be looked at.

Midway through 2020, Unilever separated the tea business into the new entity – ekaterra.

Black tea has been a major part of Unilever’s tea business, selling in 60 countries and generating around US$3.3 billion in annual sales. But sales of traditional black tea, the largest segment of the category, have been declining in developed markets for several years due to changing consumer preferences.

Completion of the deal is expected in the second half of 2022 after regulatory approvals.

Unilever said the sale does not include its Tea business in India, Nepal and Indonesia, or its interest in the Pepsi Lipton ready-to-drink Tea joint ventures and associated distribution businesses.

CVC is a private equity and investment advisory firm with approximately US$125 billion of assets under management.