$ULVR (-1,84 %) has announced that it will spin off its global ice cream division, including brands such as Magnum, Ben & Jerry's, Langnese and Cornetto, into an independent company called The Magnum Ice Cream Company (TMICC).
The reasons for this:
- Unilever sees the ice cream business as having a strong seasonal component, high capital commitment and complex supply chains - these are very different from its core beauty, personal care and food businesses.
- The spin-off is intended to release value: TMICC should grow independently, with a targeted focus on brands, realize economies of scale and offer investors a pure "ice cream playground".
Key data of the spin-off
- TMICC will be headquartered in the Netherlands and plans to be listed on the stock exchanges in Amsterdam, London and New York.
- Unilever will retain a minority stake of less than 20% after the spin-off and will reduce this over time.
- Employment conditions for around 6,000 Eiskrem employees in Europe/UK have been secured in advance for at least three years to ensure stability during the transition phase.
Opportunities & risks
Opportunities:
- TMICC can fully specialize in ice cream, allowing it to operate more flexibly and potentially achieve higher margins.
- Investors gain a clearer investment vehicle for the global ice cream market - potential for valuation premium.
Risks:
- Seasonal and weather-dependent business, cold transportation chains, competitive pressure and fluctuations in raw material and energy prices remain challenges.
- Brands such as Ben & Jerry's are also struggling with strategic tensions: e.g. conflicts over the social mission vis-à-vis TMICC/Unilever.
Question for the forum:
What do you think of the spin-off of Unilever's ice cream business into the Magnum Ice Cream Company? Do you think that TMICC really is really better positioned to increase growth and margins - or is there a risk that the spin-off will bring more risk than benefit?
Disclaimer:
I am invested and Unilever is a SWAN (sleep well at night) stock for me in my dividend portfolio, in fact one of my largest positions.
