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Unilever teaches a valuable lesson on gluttony

Unilever is teaching a valuable lesson on gluttony - and investing. The Anglo-Dutch consumer giant hedged its bets when, on the same day in 2000, it gobbled up Slim-Fast and Ben & Jerry's Homemade in separate deals. Unilever paid $2.3 billion for the weight-loss brand, which it is now selling for peanuts. Ice cream, meanwhile, has helped keep the $130 billion company fat and happy.

Slim-Fast's powders and bars were all the rage in the United States back at the turn of the century, but soon gave way to the trendy Atkins, Mediterranean and Paleo diet plans. Keeping up with weight-loss fads was too difficult. And while Unilever didn't disclose the sale price, one European analyst pegged it at about $200 million. The private equity buyer Kainos Capital has done 40 food and consumer deals over two decades, spending $2 billion - less than the original Slim-Fast purchase price.

Indulgent frozen desserts haven't gone out of style, though, evidenced by expanding waistlines and diabetes diagnoses. In the last year before it was taken over, Ben & Jerry's reported about $240 million of sales. That figure has grown to $560 million, estimates research firm IRI. Unilever paid $326 million for the maker of Cherry Garcia. At the same 1.4 times multiple of revenue, the business would now be worth $800 million.

As M&A activity swells again, the message from Unilever's binge 14 years ago is worth digesting. Fads, in both diet and investing, are dangerous.