Reckitt & Colman sells foods arm to Unilever

Two of Britain's best known brands changed hands yesterday when Reckitt & Colman, makers of Colmans mustard since 1814, sold its food business to Unilever for £250m. In turn Unilever is selling on the Robinsons soft drinks business - best known for Robinsons Barley Water - to Bass for £103m.

The deal not only severs Reckitt & Colman's links with its eponymous mustard but its ties with Norwich, where James and Jeremiah Colman first started making mustard 181 years ago.

Both Unilever and Bass have pledged to keep production in the East Anglian city but it is already clear that there will be redundancies among the 660 staff. Production staff will be retained but some marketing, administration and other managerial functions are likely to go.

David Saltmarsh, Reckitt's company secretary, said: "There's clearly an element of regret but business moves on and the Reckitt & Colman strategy is concerned with household products and toiletries. Food products are not as internationally marketable."

Reckitt & Colman put its food business up for sale in September following its $1.55bn acquisition of L&F Household, Eastman Kodak's household products division whose brands include Lysol disinfectant and Mop and Glo floor polish. Reckitt, whose portfolio includes Dettol and Harpic, still hopes to raise a further £150m from disposals of peripheral US interests. Reckitt's only remaining food brand is French's, an American mustard which the company intends to keep. The UK food business, which includes OK sauces and Jif fruit juices as well as the better known mustards, had sales of £60m last year. There had been speculation that the quintessentially English Colmans mustard would follow the likes of HP sauce and Bovril into the hands of a foreign buyer. Danone, the French group was one group that had expressed an interest.

Unilever, the Anglo-Dutch maker of Flora margarine and Persil, will continue to market Colmans chiefly in the UK but also attempt to boost its export potential, where sales are restricted to Ireland and the US. Unilver says the Colman's range of cooking sauces will fit well with its sauce range, which includes Ragu and Chicken Tonight. The food business had sales of around £60m last year.

Bass will add the Robinsons soft drinks business to its Britvic brand. The Robinsons products achieved sales of £95m last year. Bass chairman Sir Ian Prosser said that after all the one-off costs, the deal was likely to prove earnings neutral for Britvic in this financial year. He added that there were substantial synergies between the Britvic and Robinsobn brands. Britvic, for example, is strong in the convenience store sector where Robinsons is under-represented.