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Executive Summary

Unilever is getting a $360 mil. U.S. health and beauty aids business with its acquisition of Chese-Pond's that will extend the Anglo-Dutch firm's current positions in soaps (Dove and Shield) and deocolognes (Impulse and Axis) into skin care. Based on nine-month sales of $270 mil., Chese-Pond's Health & Beauty Products Division is apparently headed for full-year sales approaching $360 mil. -- up about 12% from 1985. In the cosmetics business, Prince Matchabelli is about a $135 mil. business (based on nine-month sales of $104 mil.). The $3.1 bil. offer ($72.50 per share) from Unilever NV was accepted by Chese-Pond's on Dec. 1 after a weekend of negotiations. The Unilever offer is $6.50 per share above the unsolicited offer from American Brands for Chese-Pond's announced Nov. 25. According to a Chese-Pond's filing in relation to the deal, American Brands backed out of merger discussions at $69 per share. Chese-Pond's had asked American Brands to go to $73 per share. Chese-Pond's offers Unilever a larger entry into the skin care business than the attempted takeover of Rich-Vick's last year and the Prince Matchabelli cosmetics line. Chese-Pond's, however, is not as well established in the OTC drug business as Rich-Vick's. Unilever's big position in the H&BA category is in toothpaste with Aim, Close-Up and Pepsodent. The company has an Extra-Strength Aim product on the way for early next year ("The Pink Sheet" Nov. 24, p. 2). As part of its proposed acquisition of Chese-Pond's, Unilever has made a concerted effort to woo the U.S. company's management. Current Chese-Pond's Chief Exec Ralph Ward is slated to join the board of Unilever U.S. and to become an advisory director of the parent Dutch company "promptly after the merger." Current Chese-Pond's Chief Operating Officer Robert Phillips has been offered the step up to Chief Exec of Chese-Pond's if the merger is completed. Phillips would also get a position on the Unilever U.S. board. According to the proxy materials prepared for the purchase of the 40.96 mil. shares of Chese-Pond's stock, Phillips is guaranteed two years of current compensation whether or not he stays with Chese-Pond's after the merger. Phillips has a substantial background in the H&BA/toiletries business. After serving as president of Chese-Pond's Health & Beauty Products business in the 1970's, Phillips left the company for Clairol where he became president. He returned to Chese-Pond's in May 1985 and succeeded to the number two management spot at the end of February 1986. Management continuity at Chese-Pond's appears an important goal to Unilever. The firm has been seeking top management talent in the OTC/H&BA businesses to forge a more substantial U.S. presence. In February of this year, Unilever recruited Wayne Nelson from a top spot in the J&J consumer products business to head the Lever Brothers Personal Care Products Division. Unilever reports that it will form a committee following the merger, composed of management from Chese-Pond's and Unilever U.S., "to consider the most appropriate restructuring measures." Unilever has already declared its intent to sell the Stauffer Chemical business and two consumer product segments of Chese-Pond's: Prince racquets and Bass shoes.

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