Unilever struggles to find buyer big enough for its ice cream empire
Consumer goods giant Unilever may be forced to hold on to part of its multibillion-pound ice cream operations as the business’ massive size makes it difficult to offload.
Unilever announced last month that it would spin-out brands like Magnum, Wall’s and Ben & Jerry’s by the end of 2025 as part of efforts to create a leaner business. The move could possibly result in some 7,500 job losses.
However, a full sale of the roughly £15bn ice cream operations is considered by senior City figures to be unlikely, according to The Sunday Telegraph.
It reported that even interested parties like Middle Eastern state-backed funds and major private equity firms CVC, KKR and Blackstone would struggle afford the full price tag. In the case of a sale, potential buyers would be expected to join forces in bidding consortiums to make a realistic offer.
Even still, the Anglo-Dutch firm could be forced to retain a minority stake in the business to bring down the price and leave it less exposed to criticism for selling the unit for too little.
City A.M. approached Unilever for comment.
Some analysts said Unilever could have got a better deal when it sold its spreads division, including Flora and Stork, for £6bn to KKR in 2017.
The FTSE 100 firm is also considering listing the ice cream business as a separate entity on the stock market. The New York Stock Exchange has reportedly made formal contact with Unilever bosses in an attempt to secure a float across the Atlantic.
Unilever’s new chief executive Hein Schumacher said last month that the Netherlands had “a good chance” of hosting the business.
A float in London could be a major boost to the capital’s beleaguered stock market, which has seen an exodus of firms to the US in recent times.
However, Unilever may favour listing the unit in the US because it is the world’s biggest ice cream market, with Americans consuming £16bn of the frozen dessert last year.
Plans to spin-out the ice cream operations come as Schumacher looks to reverse years of lacklustre performance that have put Unilever under pressure from shareholders.
As part of its cost-cutting drive, Unilever on Friday announced it would scale back its environmental and social pledges “to drive performance in the company”.