Unilever scrip up on Colgate merger buzz

Anglo-Dutch firm may be the buyer.

Shares of Unilever climbed to their highest in more than eight years on speculation that the world's second-largest maker of food and detergents may combine with Colgate-Palmolive Co.

"There is a rumour from London that Colgate-Palmolive is interested in buying a stake or purchasing the entire company," said Rik Zwaneveld, a trader at AFS Brokers BV in Amsterdam.

A message left for Colgate spokeswoman Bina Thompson wasn't immediately returned, while Rotterdam-based Unilever spokesman Tanno Massar declined to comment.

Some analysts said Unilever would be the more likely acquirer. The Anglo-Dutch company has a market value of about ¤75 billion ($103.1 billion), about three times that of New York-based Colgate, which makes Softsoap and Irish Spring. Unilever's personal-care products, such as Dove soap, account for about a quarter of its sales.

"I would expect it to be the other way round because of the market value of the two companies," said Ton van Ooijen, an analyst at Kepler Landsbanki in Amsterdam. "Unilever wants to expand its personal care operations, and Colgate has those activities," he added.

Unilever stock rose as much as 4.9 per cent in Amsterdam and was trading at ¤24.06 at 2.26 pm local time, set for its highest close since 1999. Its London-listed shares gained as much as 75 pence, or 4.6 per cent, to 1,722 pence. Shares of Colgate-Palmolive slipped 80 cents to $64.97 in Germany.

Separately, a Dutch regulatory filing today showed Fortis, the biggest financial company in Belgium, owned 5.1 per cent of Unilever's Dutch equity as of July 2. The firm's previous stake wasn't disclosed.

Investors in listed Dutch companies must disclose their holdings after transactions where their stakes cross 5 percentage-point thresholds between 5 per cent and 30 per cent.

BS Reporter adds: A merger of Hindustan Unilever (HUL) and Colgate Palmolive will create a Rs 14,000 crore conglomerate in India which would command more than 60 per cent market share in toothpaste alone.

Both Colgate and HUL are competing in the Rs 2,500 crore toothpaste segment, with Colgate cornering nearly half of the market. HUL, a 51 per cent subsidiary of Unilever, is the market leader in personal care, fabric care and food product businesses.

On Wednesday, HUL's shares closed 1.96 per cent up at Rs 202.40 on the Bombay Stock Exchange, with a market capitalisation of Rs 44,669 crore. Colgate was unchanged at Rs 381.55 a share, with a market capitalisation of Rs 5,188.70 crore.