Unilever – Purchase price allocation and spin-off

Project:

For years Unilever ČR has been besides others one of the leaders on the Czech household cleaning market. In 2013 an opportunity appeared when Bochemie Group decided to divest part of its business – company HomeBrands – represented by brands SAVO, BIOLIT and DIFFUSIL which were competing or complementary to Unilever brands. Unilever ČR acquired HomeBrands in the middle of 2013 and integrated it as its subsidiary company. After acquisition the purchase price allocation (PPA) in order to meet IFRS requirements as well as restructuring of HomeBrands started. RSM CZ has been asked to assist in PPA, demerger by spin-off of part of the enterprise and advise on the price of goods of HomeBrands to be transferred to a group’s sales company. All the processes were planned and made in order to align the activities of HomeBrand with comprehensive and sophisticated process management of Unilever group.

Client satisfaction:

Aleksander Solski, CFO: “I rate our cooperation with RSM CZ very high. The team displayed high level of expertise – which actually you expect from that type of partner. So if I look for an “extra” that they delivered, I’d mention 3 things:

• ability to work under tough time constraints (we involved RSM CZ quite late in the process… and they still delivered on time!);
• willingness to understand our business operations, in order to properly assess value drivers;
• open and direct communication.”

How we helped:

Petr Bruštík: “Proper integration of an acquired company within the acquirer’s processes as well as fair view of the assets acquired in the books in the process of purchase price allocation are one of the decisive factors in the success or failure of the acquisition. In the case of Unilever ČR, we had the opportunity to work with very professional and friendly team of CFO Aleksander Solski that acquisition challenges undertook with great enthusiasm. Our mission had three parts. In case of PPA , we performed the revaluation of all tangible and intangible assets and liabilities. The key was to revalue trademarks of SAVO, BIOLIT and DIFFUSIL that formed the major part of the value . Our output was used for the recognition of assets acquired for the purpose of consolidated results of the Unilever Group. The objective of the client was also the concentration of key assets (including trade marks ) at Unilever ČR and therefore it was necessary to carry out the valuation of part of the spun-off enterprise of HomeBrands , which was subsequently merged with Unilever ČR . Unilever Group has a sophisticated process management system, hence it was necessary to transfer all the stock of goods to a specialized mercantile entity within the Unilever group. To make this transfer for an adequate price, we performed valuation of each individual goods, which amounted at the date of transfer to almost 4.5 million items. The result was a pleasant cooperation on a very interesting project, which was completed by a full implementation of the business under the trademarks of SAVO, BIOLIT and DIFFUSIL in Unilever ‘s product portfolio.”