Unilever has refused to be drawn on a media report the FMCG giant has contacted private-equity firms to gauge interest in its ice-cream business.
As Unilever announced this week a potential demerger of its ice-cream unit into a separate listed company – with no decision yet set in stone – the Financial Times has reported the Magnum owner is "working with advisers to drum up interest from private-equity groups".
Unilever told Just Food via a spokesperson today (22 March) the company “had no comment to share” on whether it had approached potential private-equity suitors and if it had hired Morgan Stanley and JPMorgan Chase as advisers, as the FT reported yesterday.
The FT, quoting "people familiar with the matter", said "deliberations remain at a preliminary stage", with the publication’s sources putting a value on Unilever’s ice-cream business of around €10-15bn ($10.8bn-$16.2bn).
CVC Capital Partners was touted by the FT’s sources as having a potential interest, with the news report suggesting the private-equity firm "could now explore a bid for the ice-cream division".
The Luxembourg-headquartered investor also declined to comment when approached by Just Food today, as did JPMorgan and Morgan Stanley.
CVC completed the acquisition of Unilever’s tea business, Ekaterra, in 2022 for €4.5bn. Meanwhile, the CPG giant sold its spreads operations to another investor, KKR, in 2017 for €6.8bn.
Announcing the spin-off of ice cream this week, Unilever said: “A demerger of ice cream is the most likely separation route and, in that case, we expect the company to operate with a capital structure in line with comparable listed companies.
“Other options for separation will be considered to maximise returns for shareholders. The costs and operational dis-synergies relating to the separation of ice cream will be determined by the precise transaction structure chosen.”
The “full separation of ice cream is. however, not expected until the end of 2025.
For a Just Food analysis article this week, Karel Zoete, an analyst at financial services company Kepler Cheuvreux, said a private-equity deal would be the most likely should Unilever choose a sale option for ice cream.
“I don't see a strategic buyer. Unilever is larger than the other top five players combined,” Zoete suggested, adding that “capital gains tax implications might be significant” from a sale of ice cream.
Unilever’s separation of ice cream has raised questions over the future of the remaining parts of the company’s food portfolio, which includes brands such as Knorr soups, Hellmann’s mayonnaise and Colman’s mustard, sitting within its nutrition division.
Post an ice-cream disposal, Unilever would be left with four divisions: nutrition, beauty and wellbeing, personal care and home care.
Ice cream delivered €7.9bn in turnover for Unilever last year, while the nutrition business accounted for €13.2bn. Beauty and wellbeing personal care, and home care generated €12.5bn, €13.8bn and €12.2bn, respectively.
Analysts at Barclays, led by Warren Ackerman, said this week ice cream had been “dilutive” on Unilever’s historical performance, suggesting the spin-off “is another step to shift its portfolio more towards HPC [home and personal care]”.
The Barclays analysts wrote in a research note: “Overall, this is firm action that the market has been looking for. It still has a big job to improve competitiveness but we think it is moving in the right direction. There will now be inevitable questions about the future of its nutrition division, which is also dilutive to growth (although not to margins). It is very clear that Unilever’s future is HPC.”
