Unilever has agreed to acquire 82% of Concern Kalina, the Russian beauty company for RUB 21.5 billion, or $688 million.

According to Unilever, Concern Kalina is Russia’s largest local personal care player with leading positions in skin and hair care and an expected 2011 turnover of around $417 million (RUB 13 billion). The company, which is headquartered in Ekaterinburg, has a strong, extensive distribution network and sells its products primarily in Russia, Ukraine and Kazakhstan. It employs around 1,900 people.

“We are delighted to be acquiring Concern Kalina. This will transform Unilever’s personal care business in Russia, giving us leading positions in skin care and hair care, as well as establishing a presence in oral care. It will also strengthen and re-balance Unilever’s portfolio and competitive position in Russia, an emerging market with considerable potential and one of our priority countries,” said Paul Polman, CEO of Unilever.

The company notes that the deal also:

• enhances Unilever’s presence in an attractive, high-growth market with a differentiated portfolio which has grown at above market rates in competitive categories;

• adds to Unilever’s portfolio successful, authentic Russian brands in skin care, hair care and oral care like Pure Line, Black Pearl, Silky Hands, 100 Recipes of Beauty and Forest Balm, complementing Unilever’s own brands such as Dove, Sunsilk, Timotei and Clear; and

• provides Unilever with the opportunity to use its technology to take these brands to a new level.

“Personal care is a strategic category for Unilever and growing rapidly. Ten years ago it represented 20% of Group turnover; strong organic growth has driven it to now reach over 30%, with strong positions in many of the emerging markets,” said Polman.

The acquisition is expected to complete by the end of 2011. On completion Unilever intends to launch a Mandatory Tender Offer to acquire the remaining shares that are not part of the initial agreement, at such time and on terms mandated by Russian law.