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Unilever intends to buy Russia's Kalina Concern

October 14, 2011, 10:18 UTC+3

The deal will cost the company $850 million

1 pages in this article

LONDON, October 14 (Itar-Tass) — The well-known British-Dutch food and cosmetic company Unilever Plc intends to buy Russia’s Kalina Concern, The Wall Street Journal reported on Friday citing its sources.

The European manufacturer of consumer products is expected on Friday to announced the deal that will cost the company $850 million.

Unilever has been working in Russian since 1991. The company already owns eight enterprises here.

According to WSJ, “It would be the latest emerging-markets deal by a large Western consumer-products company. Spirits company Diageo PLC, for example, bought Turkey's Mey Icki for $2.1 billion earlier this year. Unilever itself in 2008 bought Russian ice cream company Inmarko for an undisclosed amount.”

“The deal also would further Unilever's efforts to expand its personal-care unit. Unilever markets major global skincare brands such as Dove, Pond's and St. Ives. Kalina's personal-care products includes Pure Line and Black Pearl face and body creams and Forest Balsam toothpastes and mouthwashes. Unilever has coveted the Russian company as a target for years, a person familiar with the matter said.”

“Such personal-care products often carry higher margins than other consumer-goods items, such as laundry detergents, ice creams or mayonnaises. Personal care, one of Unilever's four broad product categories, accounted for 31.1 percent of the consumer-goods giant’s 44.3 billion euros ($61.1 billion) in annual sales in 2010. It was the fastest-growing category,” WSJ reported.

“When it comes to personal care products such as skin creams and shampoos, shoppers tend to pay close attention to innovations like anti-wrinkle properties or anti-frizz components, respectively. This allows companies like Unilever to launch novel products that command higher prices, a key way of growing the business,” the newspaper said.

“Kalina arose out of a state-owned Soviet cosmetics and perfume business. The company was privatised in 1992 and later changed its name to Kalina some seven years later. Since then, Kalina has risen to become a leading player in the Russian market, commanding 30.4 percent of the country's face-cream market and 35.6 percent of its hand and body lotion market, according to the company's 2010 annual report. It is also a leader in Russia’s mouthwash market, with a 45.6 percent market share, according to the report. The deal gives Unilever a stronger base in one of the world’s most promising skin-care and cosmetics markets. Particularly since the collapse of the Soviet Union, Russian women have been keen buyers of skin-care and makeup products. That buying power accelerated generally over the last decade as Russian consumers spent more money on discretionary products like face creams, though Russian consumers recoiled during the financial crisis,” according to WSJ. “The deal will also put Unilever into closer competition with L'Oreal SA in the skincare and shampoo market and with Colgate-Palmolive Co. in the mouthwash and toothpaste market.”

The Yekaterinburg-based Kalina Concern is Russia’s major cosmetic company, which includes foreign factories. It owns such brands as “Black Pearl,” “Silky Hands,” etc.

OJSC Concern Kalina is one of the leading Russian cosmetics producers offering a wide range of products to its customers in Russia, CIS and Europe, according to the company website. Kalina develops strong brands in the key segments of the Russian cosmetics market. The leading brands of the company are “Black Pearl,” “Clean Line,” “100 recipes of beauty,” Silky Hands and Dr. Scheller - among skin-care products; “32” and “Forest Balsam”- among oral care products.

Concern Kalina consists of its parent enterprise in Yekaterinburg and several subsidiaries, including Pallada Ukraine (Ukraine), Glavskazka International (Russia), Kalina Finance” (Russia), Dr. Scheller Beauty Centre (Russia), Kalina International SA (Switzerland), Kalina Overseas Holding B. V. (Netherlands) and DSN Cosmetics GmbH (Germany).

Concern Kalina is a public company and follows advanced standards of corporate governance. Company’s shares are listed on the stock exchanges RTS and MICEX, as well as on the foreign over-the-counter market in form of ADR/GDR.

Unilever is a British-Dutch multinational corporation that owns many of the world's consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever is a dual-listed company consisting of Unilever N.V. in Rotterdam, Netherlands and Unilever PLC in London, United Kingdom. This arrangement is similar to those of Reed Elsevier and Royal Dutch Shell prior to their unified structures. Both Unilever companies have the same directors and effectively operate as a single business. The current non-executive Chairman of Unilever N.V. and PLC is Michael Treschow while Paul Polman is Group Chief Executive.

Unilever's main international competitors include Nestl· and Procter & Gamble. They also face competition in local markets or product ranges from companies such as Grupo Bimbo, Beiersdorf, ConAgra, Danone, General Mills, Henkel, Mars, Inc., Pepsico, Reckitt Benckiser and S. C. Johnson & Son.


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