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Unilever boss Hein Schumacher is moving up a gear by deciding to split his main global ice cream brands, including Wall’s, Magnum and Ben & Jerry’s.
It’s a bold move as ice cream sales have recently outperformed many of the consumer goods giant’s other food categories, even though a complex supply chain negatively impacts profit margins.
Although conglomerate structures have their advantage, helping to smooth out performance differences, they often mask underlying value and interfere with focus. Doing the splits can therefore work wonders.
Within ICI, the pharmaceutical branch Zeneca has only just been registered.
But after James Hanson’s takeover bid for ICI failed in 1991, Britain’s largest industrial group at the time decided it had no choice but to pull out of Zeneca.
Frozen: Unilever boss Hein Schumacher is selling off the company’s biggest global ice cream brands, including Wall’s, Magnum and Ben & Jerry’s.
It then merged with Swedish company Astra and AstraZeneca now rivals energy giant Shell to become the most valuable company in the FTSE 100.
More recently, in the same sector, the separation of Haleon consumer health products allowed Emma Walmsley at GSK to restore value and refocus the life sciences and vaccinations group.
The big concern with splits is that they make the company more vulnerable to takeovers.
This was certainly the case at Cadbury after Nelson Peltz, now head of Unilever, encouraged the break-up and flotation of its Schweppes soft drinks arm.
In the case of Unilever, with its vast range of brands, a disposal worth an estimated £15 billion or more is unlikely to leave the parent company exposed.
When Kraft Heinz invested £115 billion in Unilever in 2017, management pushed back on the predator without even consulting investors.
This still remains in the clutches of investment guru Terry Smith, a vocal critic of Unilever in the past.
The Fundsmith boss believes Schumacher is doing the right thing with the ice split and reorganization which will result in the loss of 7,500 more jobs, largely in offices. He is skeptical about calling this a “Growth Action Plan”.
One of the unanswered questions surrounding ditching ice cream is deciding where the new company will be listed as a separate entity.
When Unilever tried to hide in Rotterdam in 2018, it was largely defeated by British investors.
The suggestion now is that the separate ice cream company has three choices. Amsterdam, because the company is based there and following a commitment made to the Dutch authorities.
The United States, because it is the largest ice cream market. And London, because Wall’s has a British heritage dating back to the 19th century.
There should be no competition. Unilever is essentially a European company with deep roots in the UK.
Moving the float to the Netherlands after the previous battle over Rotterdam would reopen old wounds and could raise tax issues for British shareholders.
Divesting ice cream, particularly the luxury brand Ben & Jerry’s, could relieve Unilever of a delicate political problem.
He has regularly found himself at odds with Vermont’s independent board, which has been highly critical of Unilever’s presence in Israel and the West Bank.
It must be recognized that Unilever, whose history in the Middle East dates back to the beginning of the 20th century, has never hesitated to find the means to supply Ben & Jerry’s in the region.
So what do we think of Unilever’s rump? Over the years, its food branch has lost its importance with the sale of spreads like Flora and more recently its tea branch. One hopes that Marmite, with its historical connotations in the UK, is sacrosanct.
It has been clear for some years that the most important elements of Unilever, dating back to its origins in Port Sunlight on Merseyside, are beauty and wellbeing, personal and home care, with nutrition at the bottom. platoon. Selling ice cream is a big decision.
But this will not be the last provision.