Unilever’s Ice-Cream demerger targets growth, value creation

UK – Unilever has officially confirmed the spin-off of its ice-cream business units in India and Indonesia, marking a significant step in the company’s global demerger strategy.

The announcement comes after months of speculation, with the UK-based consumer goods giant outlining the move’s progress in recent filings and statements.

According to Unilever, the demerger aims to establish a separate, publicly listed ice-cream entity in India, with a similar structure anticipated for Indonesia.

This development follows Unilever’s initial disclosure in March regarding plans to separate its ice-cream operations globally. Despite exploring alternative options, the company reaffirmed last week its commitment to proceed with the demerger.

In a regulatory filing with the London Stock Exchange on November 22, Unilever stated, “Unilever remains on track to deliver our comprehensive US$840.5 million productivity programme and the separation of ice cream by the end of 2025.”

The company emphasized that this move would enhance operational focus and shareholder value.

As reported by Hindustan Unilever (HUL), Unilever’s Indian subsidiary, the ice-cream division will be spun off and listed independently on the local stock market. This plan awaits board and shareholder approval, expected early next year.

“The board considered different modes of separation of the ice-cream business and after due consideration, with a view to maximize value for all the shareholders, the board has accorded in-principle approval to demerge the business,” the HUL statement noted.

The statement further highlighted that shareholders will receive proportional shares in the new ice-cream entity.

Notably, brands like Kwality Wall’s, Cornetto, and Magnum are expected to benefit from a more focused management approach post-demerger.

According to HUL, these brands currently maintain “mid-to-high single-digit profitability,” and the new structure is poised to provide enhanced flexibility for strategic deployment.

In Indonesia, Unilever’s plan involves transferring its ice-cream business to PT The Magnum Ice Cream Indonesia, an internal holding company.

The deal, valued at approximately  US$440.2 million, includes various assets and will also require shareholder approval.

The Indonesian statement revealed that the purchaser currently has an affiliate relationship with Unilever, which will end upon the transaction’s completion.

 “Such a sale will enable the company to realize the value of its investment in the Indonesian ice-cream business and return such value to its shareholders in the short term, and re-focus on its remaining core businesses to enhance value to shareholders in the long term.”

Industry reports last week dismissed earlier speculations that Unilever might sell its ice-cream business to private-equity investors.

Instead, the company is proceeding with the demerger to create distinct, independent entities that can better focus on their market-specific growth strategies.