• Unilever’s tea business comprises 34 global brands, including the well-known Lipton, PG Tips, and T2 Tea. Last year, all the tea brands on the deal’s table brought in a collective €2bn ($2.3bn) in revenue. However, the sale to CVC excludes Unilever’s tea business in India, Nepal, Indonesia, and its bottled tea joint venture with PepsiCo (Pepsi Lipton), which accounts for €1bn in annual sales.

• Unilever announced plans to spin off its tea business last year, and the sale to CVC represents the conclusion of that spin-off. The company’s tea business, now named Ekaterra, has struggled with meager sales growth as part of the industry’s general trend. This is the type of situation where PE firms usually step in, seeking to buy a struggling business (but with good cash flow) with the hopes of turning things around.

• Unilever launched an auction process for Ekaterra this week. CVC emerged as the winning bidder against rival PE firms Carlyle Group (NASDAQ: CG) and Advent International. 

Ekaterra includes 34 tea brands and three large tea plantations in east Africa that’ll be handed to CVC. The plantations have been a major source of contention for Unilever, with extensive allegations of worker abuse. In fact, the plantation controversy is reportedly what caused Carlyle Group and Advent to back out of the auction process and leave CVC as the only willing bidder.  

• In recent years, Unilever as a whole has struggled with slow sales growth. The Covid pandemic compounded the situation with inflation that hiked the cost of raw materials and then passed on to consumers in the form of price hikes. The consumer goods industry is highly price-sensitive, unlike many other industries.

• Unilever pulled in $58bn in revenue last year, up just 2% from the previous year. The London-listed company has a current market cap of £99bn ($133bn).