What happened?

Unilever (UL -0.80%) is going the green route with its latest acquisition. The global consumer goods company announced this week that it has agreed to purchase privately held Seventh Generation, a maker of eco-friendly household products. Neither the price nor the terms of the deal were disclosed.

However, a report in Fortune, citing "a source familiar with the deal", said that the purchase price is between $600 million and $700 million. 

Image source: Seventh Generation. 

In the press release announcing the acquisition, the president of Unilever's home care business characterized its asset-to-be as "a disruptor in the U.S. marketplace", adding that "[t]his addition to Unilever's product portfolio will help us meet rising demand for high-quality products with a purpose."

Does it matter?

Seventh Generation products enjoy good visibility, occupying plenty of shelf real estate in American stores. According to Unilever, the private company's sales topped $200 million last year, with compound annual growth in the double digits over the past decade.

A more promising figure is the company's sales structure -- around 95% of its revenue is derived from North America. Under the Unilever umbrella, Seventh Generation has the potential to grow much larger as its new parent company pushes to make the brand the default green option in markets all over the world.

Owning Seventh Generation boosts Unilever's overall competitiveness against eternal rival Procter & Gamble. In contrast to Unilever's recent acquisition activity, Procter & Gamble has been shedding assets instead of acquiring them. Despite that, Procter & Gamble has been the better-performing stock of late, rising by over 11% year-to-date compared to Unilever's 7% gain.

News of the Seventh Generation deal comes on the heels of speculation that Unilever is interested in pursuing The Honest Company, another green products purveyor. Whether or not a deal for that company is in the cards, it's obvious that Unilever is serious about beefing up its product lines in this niche. Seventh Generation, with its past success and its future potential, seems like a sensible move in that direction.