November 24, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

CVC Capital Partners Fund VIII has agreed to acquire Unilever’s global tea business, ekaterra, for  €4.5 billion (US$5.04 billion) through a cash-free, debt-free deal. 

With a network of 25 offices throughout Europe, Asia, and the U.S., and $125 billion in AUM, CVC stands as a leading global private equity and advisory firm. Since its founding in 1981, the firm has secured commitments exceeding $165 billion from some of the top institutional investors in the world, and its managed or advised funds are invested in more than 100 global companies with combined annual sales of more than $100 billion.

This deal represents one of the largest divestments by an EU company to be executed this year. ekaterra is the world’s leading tea business, with a portfolio containing 34 brands, including the highly recognizable Lipton, PG tips, Pukka, T2, and TAZO® (which Unilever acquired from Starbucks in 2017 for $384 million). It also employs about 3,500 people, and brings with it 11 production factories in four continents, and tea estates in three countries.  

“ekaterra is a great business, built on strong foundations of leading brands and a purpose-driven approach to its products, people and communities,” said Pev Hooper, managing partner, CVC Capital Partners. “ekaterra is well positioned in an attractive market to accelerate its future growth, and to lead the category’s sustainable development. We look forward to working with the team to realise ekaterra’s full potential.”

As the second most consumed drink in the world after water, and with a history reaching back into ancient times, tea is deeply woven into the human experience. Prevalent and inexpensive, tea is a key component of the global beverage market and is considered a healthy beverage due to its antioxidant and mineral content. In 2020 the global tea market was valued at $47.43 billion, and is expected to grow at a CAGR of 7.15 percent to reach a value of $71.8 billion by 2026, according to ResearchAndMarkets. 

CVC beat out rival private equity bidders including Advent International for ekaterra, however, the deal does not include Unilever’s tea business in India, Nepal, or Indonesia, nor does it include Unilever’s interest in the Pepsi Lipton ready-to-drink tea joint ventures or its associated distribution businesses. 

Alan Jope, CEO of Unilever, stated that the sale of ekaterra is part of the company’s growth strategy and evolution into higher growth spaces, saying, “Our decision to sell ekaterra demonstrates further progress in delivering against our plans.”

“We are proud of the place that our Tea business has in our company’s history,” Jope continued. “We look forward to seeing ekaterra, with its strong brands and global footprint, prosper under CVC Fund VIII’s ownership. I would like to thank our Tea colleagues around the world for their passion and commitment to our Tea business and wish them well for the future.”

John Davidson, CEO of ekaterra, added, “ekaterra is a strong business with positive momentum and has an exciting future ahead under the new ownership of CVC Fund VIII. We look forward to the next stage of our journey as the world’s leading Tea business.”

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.