By Saabira Chaudhuri and Sharon Terlep 

LONDON -- Unilever PLC is getting into the market for "natural" cleaning products with a deal to buy Seventh Generation Inc., a maker of plant-based detergents and household cleaners.

The European consumer products giant behind Dove soaps and Axe body sprays agreed to pay roughly $700 million for Seventh Generation, a person familiar with the terms said.

The deal gives Unilever a foothold in the U.S. market for diapers and tampons in addition to detergents and hand soap, traditionally strongholds of rival Procter & Gamble Co.

The Wall Street Journal recently reported that Unilever was in early-stage talks to buy Honest Co., the consumer-products retailer co-founded by actress Jessica Alba that claims to avoid using harsh chemicals. That deal, which would have set Unilever back by more than $1 billion according to people familiar with the talks, is now unlikely.

Seventh Generation, founded in 1988, had sales of more than $200 million last year, according to Unilever. The Vermont-based company's valuation has soared in the last decade. An investment deal in 2007 put the company's value at around $100 million at the time.

"We look at this as having a multiplier effect for our business," said Seventh Generation Chief Executive John Replogle, who will stay on to run the company. "We always aspired to be a billion-dollar brand. We see this as a springboard as opposed to throwing in the towel."

Seventh Generation shareholders include its management, private-investment funds as well as Catamount Ventures, a San Francisco venture-capital firm, and Generation Investment Management LLP, a London-based fund founded by former Vice President Al Gore.

Mr. Replogle said the idea for a deal came from a meeting he had in January with Nitin Paranjpe, president of Unilever's Home Care business at chain drugstore conference in Florida. The company saw Unilever as a good fit given the company's years'-long emphasis on reducing its environmental impact, he said.

The Seventh Generation deal comes weeks after Unilever acquired Dollar Shave Club for about $1 billion. The fast-growing but unprofitable startup provides a mail-order service that ships disposable razors for a flat monthly fee that has challenged P&G's Gillette business.

For Unilever, it is a return to the detergent business. The company sold its North American laundry detergent business, which included the All and Snuggle brands, for $1.45 billion to a private-equity firm in 2008. That business was recently acquired by another rival, Henkel AG.

"This addition to Unilever's product portfolio will help us meet rising demand for high-quality products with a purpose," said Unilever's Mr. Paranjpe.

--Serena Ng contributed to this article.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and Sharon Terlep at sharon.terlep@wsj.com

 

(END) Dow Jones Newswires

September 19, 2016 17:02 ET (21:02 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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