According to the Great Law of the Iroquois, every decision must be made with the future in mind. 

And without a doubt, long-term gains are what Unilever (UN) had in mind yesterday as it announced its intention to purchase Seventh Generation, a private company named for the famous Native American principle.

The European-based consumer products conglomerate will pay a reported $700 million for the smaller company, which is based in Vermont and manufactures sustainable and eco-friendly home and personal care products. Shares fell slightly in Tuesday trading.

Seventh Generation was founded in 1988 and generated sales of more than $200 million in 2015. "We look at this as having a multiplier effect for our business," said the company's CEO John Replogle. "We always aspired to be a billion-dollar brand. We see this as a springboard as opposed to throwing in the towel."

Unilever had previously been considering the purchase of Honest Co., another natural products company co-founded by actress Jennifer Alba. Honest Co. has more of a focus on baby and feminine products, while Seventh Generation also markets cleaning and paper products, as well as staples such as diapers and tampons.

It's now unlikely that Unilever will still pursue the acquisition of Honest Co. That's because the purchase of Seventh Generation, which is still subject to regulatory approval, will fill a gap in the conglomerate's product portfolio, giving the company an edge in the personal care market where it could then compete with personal care company Kimberly-Clark, as well as with Procter & Gamble, the market leader.

The purchase of Seventh Generation would also continue Unilever's spree of buying eco-friendly and "green" companies that began in 2000 with the acquisition of do-gooder ice cream brand Ben & Jerry's. Unilever gobbled up eco-conscious startup Dollar Shave Club for $1 billion only last week.

These "green" purchases are made to capture Millennial consumers, who are more likely to buy household and personal items that are marketed as being environmentally friendly, organic, and free of synthetic dyes and fragrances. This is the same demographic that has led restaurants such as McDonald's to revamp recipes to eliminate artificial ingredients.

So far, Unilever's efforts to grow its market share and keep up with current trends have paid off. For the most recent quarter, the company beat Wall Street's expectations for revenue and rewarded investors along the way.

Shares of Unilever have ticked slightly downward in trading today. Look for any dips in price to jump in and grab shares. Once the sales results from Millennial-friendly Dollar Shave Club and Seventh Generation brands start rolling in, you could stand to collect some tidy profits.


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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.