By  on January 26, 2009

LONDON — Unilever is stepping into the salon.

The Anglo-Dutch consumer goods giant has just inked a deal to acquire the Dallas-based Tigi professional hair products business, as well as its two advanced education academies, for $411.5 million. The companies stated further payments related to future growth may be made “contingent upon meeting certain thresholds.”

The acquisition of Tigi, a subsidiary of Toni & Guy, includes the Bed Head, Catwalk and S-Factor brands, and marks Unilever’s entry into the professional hair care arena. The business will run as a freestanding global business unit reporting to Michael Polk, president of Unilever Americas, and will continue to be based in Dallas. Tigi’s founders, Bruno, Anthony and Guy Mascolo, all brothers, will serve as consultants for the firm, which generated worldwide sales of about $250 million in 2008. They will continue to own and operate its salon business, which consists of about 60 salons in the U.S. and 300 to 400 salons worldwide.

According to Bruno Mascolo, “It was about three years ago we made a decision [to look for a suitor as] we had grown to where we really needed to partner with someone like a Unilever. We were limited in what we could do. The company had very little leverage [in the industry] and once you get to a certain size you need a capital infusion.”

The deal, stated Vindi Banga, president of Unilever’s Foods and Home and Personal Products division, allows the firm to “bring our world-class [research and development] expertise to and offer greater opportunity for geographical expansion.”

With a hair-care portfolio which includes Dove, Suave, Sunsilk and Clear, Tigi’s prestige positioning and salon-oriented distribution network is a departure for Unilever.

Mascolo explained that Unilever’s absence in the category presented itself as a positive.

“They are not interested in acquiring a brand and breaking it down. They wanted to keep it running as a stand-alone and keep on a majority of the [550] employees.” Tigi’s president, Thomas Reasonover, will retain his position; as a consultant, Mascolo sees himself lending a voice in Tigi’s overall strategy going forward. Anthony Mascolo, he added, will handle much of the firm’s marketing and education.

Martin Deboo, consumer goods analyst at London-based Investec, said, “The challenge for Unilever will be to capture the benefits without compromising Tigi’s culture. It’s generally difficult for large corporations to assimilate small, entrepreneurial acquisitions. But Unilever should have some valuable learnings in this area from the Ben & Jerry’s [ice-cream business] acquisition.”

Launched in 1986, Tigi, which generates about half of its annual sales in the U.S., also has operations in the U.K., Ireland, Italy, Germany and Australia. Dependant on regulatory approval, the deal is expected to wrap up by the end of March. Michel Dyens and Co. acted as financial advisor to Tigi.

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