Unilever: Searching for suitors for ice cream – economic article

Unilever is looking for candidates for its ice cream division, which is already working with advisers to attract interest from private equity funds.

According to reports cited by the Financial Times, bankers from Morgan Stanley and JPMorgan have approached investors to attract interest in the ice cream business, which includes brands such as Wall's, Magnum and Ben & Jerry's. Discussions are still at a preliminary stage.

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The company is a global leader in its category and could be worth between 10 billion and 15 billion euros in any deal, sources familiar with the discussions said. Barclays values ​​the ice cream unit at up to 17 billion euros.

Unilever: Stop ice cream – 7,500 job cuts

The company announced last Tuesday that the ice cream division would do better as a standalone business. Last year, it achieved revenues of 7.9 billion euros. Unilever said no final decision had been made on how to split the business, but added that “a division is the most likely separation route” and that it plans to complete the process by the end of next year.

Group CEO Hein Schumacher has revealed plans to break up its ice cream business and cut 7,500 jobs as part of a turnaround plan.

He even said that the ice cream business is likely to go public by the end of 2025.

Contacts

In the aftermath, the Financial Times reports, Unilever's advisers immediately began contacting private equity firms.

The Netherlands-based ice cream division represents about 16% of the group's total sales. Schumacher took office last July, tasked by the board of directors, including billionaire activist investor Nelson Peltz, with transforming the company after years of lackluster growth.

“Fork” Pan and Jerry

A fund executive told the Financial Times that selling the unit could be complicated by Ben & Jerry's, and that the brand could lower the overall price, despite generating strong cash flows.

Ben & Jerry's has caused headaches for its parent company over the years due to its interference in political issues. For example, its attempt to stop the sale of ice cream in the occupied Palestinian territories led to a protracted legal battle between Unilever and the brand's independent board.

“Regardless of any new ownership structure, Ben & Jerry's remains committed to advancing our three-pronged mission and is well positioned to continue growing our global company,” Ben & Jerry's said in a statement on Wednesday.

ΗCVC

CVC, which bought Unilever's tea business for €4.5 billion in 2021, could now explore a bid for its ice cream division, according to people familiar with the discussions. The disposal of the ice cream division will leave Unilever with four businesses covering beauty and wellness, personal care, home care and nutrition.

The combination of Unilever's large-scale operations – the group also makes Marmite, Hellmann's and Dove soaps, as well as Domestos and Cif cleaning products – and slow growth piqued Peltz's interest. The activist investor gradually built up a stake in the company before taking a seat on the board in 2022.

The Financial Times indicated that Unilever, Morgan Stanley, JPMorgan and CVC declined to comment.