Notes to the consolidated accounts
26 Acquisitions and disposals
2007
During 2007 we purchased minority interests in subsidiary companies in Greece and India. We invested in a new venture fund, Physic Ventures, which is accounted for as an associate, and made additional investments in two other venture companies, Spa and Salon International Limited and Langholm Capital, both of which are accounted for as associates.
With effect from 1 October 2007, Unilever and Remgro Ltd. reached agreement to reorganise their respective shareholdings in the Unilever businesses in South Africa and Israel. In the reorganised shareholding Unilever has a majority share in a single South African business and fully owns the Unilever Israel foods and home and personal care business. As a result of this transaction, Unilever has reported a profit on disposal of €214 million and goodwill of €168 million.
On 1 January 2007, Unilever completed the restructuring of its Portuguese businesses. The result of the reorganisation is that Unilever now has a 55% share of the combined Portuguese entity, called Unilever Jerónimo Martins. The combined business includes the foods and home and personal care businesses. The remaining 45% interest is held by Jerónimo Martins Group. The structure of the agreement is such that there is joint control of the newly formed entity and so it is accounted for by Unilever as a joint venture.
Other disposals in 2007 included the sale of local Brazilian margarine brands. In addition, to further develop our healthy heart brand margarine, Becel, in Brazil we have established a joint venture with Perdigão. During 2007, we have also announced the disposal of Boursin to Le Groupe Bel for €400 million, and the disposal of Lawry's and Adolph's seasoning blends and marinades business to McCormick and Company for US $605 million. Both will be effective during 2008. See note 33 for further details. Furthermore, we announced plans to dispose of our North American laundry business, the process for which is ongoing.
2006
During 2006 we purchased minority interests in subsidiary companies in Greece and Algeria, trademarks in Czech Republic, distribution in Tunisia and Vashisti business in India. Also an additional investment into Langholm Capital Partners Fund was made and classified as an acquisition of associates (see note 11).
On 3 November 2006, Unilever announced that it had reached a final agreement with Permira Funds to sell the majority of its European frozen foods business for €1.7 billion. The Unilever businesses being sold in this transaction include the frozen foods operations in Austria, Belgium, France, Germany, Ireland, Netherlands, Portugal and the United Kingdom.
Other disposals in 2006 were Mora in the Netherlands and Belgium, Finesse in the US, Canada and Sweden, Friol in Italy and Nihar and tea plantations in India.
2005
The principal disposals in 2005 were Unilever Cosmetics International across the world, Stanton Oil in the UK and Ireland, Dextro in various countries in Europe, Opal in Peru, Karo and Knax in Mexico, spreads and cooking products in Australia and New Zealand, Crispa, Mentadent, Marmite, Bovril and Maizena in South Africa, frozen pizza in Austria, Biopon in Hungary and tea plantations in India.
In March 2005 Unilever restructured its Portuguese foods business. Before the restructuring Unilever Portugal held an interest in FIMA/VG – Distribuição de Produtos Alimentares, Lda. (FIMA) foods business, a joint venture with Jerónimo Martins Group, in addition to its wholly owned Bestfoods business acquired in 2000. As a result of the transaction the two foods businesses – FIMA and Unilever Bestfoods Portugal – were unified and the joint venture stakes were re-balanced so that Unilever holds 49% of the combined foods business and Jerónimo Martins Group 51%. During 2006, Unilever signed an agreement with Jerónimo Martins to restructure the ownership of the Portuguese operations effective 1 January 2007.
| € million | € million | € million | |
|---|---|---|---|
| Disposals | 2007 | 2006 | 2005 |
| Goodwill and intangible assets | 5 | 1 | 150 |
| Other non-current assets | 44 | 242 | 78 |
| Current assets | 117 | 354 | 207 |
| Trade creditors and other payables | (48) | (157) | (106) |
| Provisions for liabilities and charges | (34) | (91) | (15) |
| Minority interest | 71 | – | (1) |
| Net assets sold | 155 | 349 | 313 |
| (Gain)/loss on recycling of currency retranslation on disposal | (1) | – | (5) |
| Profit on sale attributable to Unilever | 399 | 1 528 | 655 |
| Consideration(a) | 553 | 1 877 | 963 |
| Cash | 168 | 1 870 | 845 |
| Cash balances of businesses sold | (4) | – | (17) |
| Financial assets, cash deposits and financial liabilities of businesses sold | 113 | (5) | 8 |
| Non-cash items and deferred consideration(a) | 276 | 12 | 26 |
| Payment received in prior year | – | – | 101 |
(a) For 2007, includes €214 million fair value economic swap in South Africa.
The results of disposed businesses are included in the consolidated accounts up to their date of disposal.
The following table sets out the effect of acquisitions in 2007, 2006 and 2005 on the consolidated balance sheet. The fair values currently established for all acquisitions made in 2007 are provisional. The goodwill arising on these transactions has been capitalised and is subject to an annual review for impairment (or more frequently if necessary) in accordance with our accounting policies as set out in note 1. Any impairment is charged to the income statement as it arises. Detailed information relating to goodwill is given in note 9.
| € million | € million | € million | |
|---|---|---|---|
| Acquisitions | 2007 | 2006 | 2005 |
| Net assets acquired | 94 | 42 | 7 |
| Goodwill arising in subsidiaries | 334 | 60 | 13 |
| Consideration | 428 | 102 | 20 |
Consideration consisted of €214 million cash, principally relating to acquisitions of minority interest, and €214 million fair value economic swap in South Africa.
