Morgan Stanley bags big spots on Unilever, Reckitt deals - sources

By Martinne Geller and Pamela Barbaglia

LONDON (Reuters) - Unilever and Reckitt Benckiser Group have picked Morgan Stanley to advise on their planned food brand disposals, sources said on Thursday, giving the U.S. investment bank a seat at two of the consumer industry's most sought-after tables.

Unilever is also working with Goldman Sachs on the sale of its margarine and spreads business, according to the sources, who declined to be identified as both processes are private.

Officials at Unilever, Reckitt and Morgan Stanley declined to comment. Goldman was not immediately available to comment.

The appointments give a boost to Morgan Stanley, which has recently had some high-level departures, including this month's loss of Michele Colocci, chairman of M&A for Europe, the Middle East and Africa, to JP Morgan.

Morgan Stanley has also dropped to sixth place in first-quarter European M&A league tables from second in the year-earlier period, according to Thomson Reuters data. Still, it topped global M&A rankings in the first quarter, thanks to its North American franchise.

Unilever's spreads business, which could have a price tag of around 6 billion pounds ($7.52 billion), will be mainly pitched to private equity firms, the sources said, as they are likely to appreciate the business's strong profits despite sales that have fallen as people in developed markets eat less bread and margarine.

Unilever has already received calls from several such firms, Chief Financial Officer Graeme Pitkethly told Reuters in an interview last week.

In 2015, Unilever reorganised the spreads business into a separate entity, sparking widespread speculation it would be sold.

Unilever executives have since said they were assessing the business and working to stabilise its sales, and sources said Goldman was helping on the review. But Unilever did not officially announce a sale of the spreads business until last week as part of a radical review following February's unsolicited $143 billion takeover offer from Kraft Heinz.

Both banks have advised Unilever on deals in the past. For example, Morgan Stanley worked on the sale of Ragu and Bertolli sauces, while Goldman ran the sale of Wish-Bone salad dressings.

Morgan Stanley was also involved in Unilever's defence against Kraft, along with Centerview Partners, UBS and Deutsche Bank.

While Unilever is the seller of spreads it could be a possible buyer for the smaller foods business being sold by rival Reckitt Benckiser. This business, centred around French's mustard in North America, could be worth roughly $3 billion, sources estimated.

Unilever already has the British and French mustard brands Colman's and Maille. Chief Executive Paul Polman signalled a possible interest when talking to reporters last week.

Sources have also said Reckitt's food business could make sense for McCormick, Hormel Foods or Pinnacle Foods from the United States or Japan's Ajinomoto. Kraft Heinz might have antitrust issues, one source said.

McCormick, Hormel, Ajinomoto and Kraft declined to comment, while Pinnacle was not immediately available to comment.

Reckitt confirmed earlier this month that it was exploring options for the business, which is not central to the company's ambitions in consumer healthcare and home products. Reckitt is expected to use proceeds of the sale to pay down debt following its $16.6 billion purchase of baby formula maker Mead Johnson.

($1 = 0.7980 pounds)

(Additional reporting by Lauren Hirsch in New York and Anjuli Davies in London; Editing by Jane Merriman)