M&A

Unilever puts Ben & Jerry's and Magnum ice creams on sale

The Anglo-Dutch giant has started initial discussions on the divestment of the division that could be worth up to £15 billion

19 July 2024

2' min read

Negotiations for Unilever's ice creams begin. Many funds are queuing up to buy historic companies such as Ben & Jerry's, which conquered the United States from the mountains of Vermont, and global brands such as Magnum. After months of rumours, the Anglo-Dutch giant has begun initial discussions on a possible sale of a division that could be worth up to £15 billion.

Presentations to funds

The consumer goods company has for the time being started to hold presentations with potential bidders. According to agency reports yesterday, private equity firms Advent International, Blackstone Inc., Cinven and CVC Capital Partners Plc are among those that have shown preliminary interest.

According to Bloomberg, other buyout firms such as Clayton Dubilier & Rice and KKR & Co. are also studying the asset. A formal sale process is expected to begin in the second half of the year.

For now, Unilever, up 18% on the London Stock Exchange since the beginning of 2024, does not comment.

The strategy of cuts and divestments

Unilever's new CEO, Hein Schumacher, unveiled an ambitious plan in March to stimulate growth, including the separation of the ice cream business. The new group head, appointed after activist Nelson Peltz took a stake in Unilever and joined the company's board, also planned to cut 7,500 jobs - almost 6% of the soap maker Dove's total of 128,000. In a moment of transformation for the Anglo-Dutch giant, Unilever announced last week that it will cut a third of its office staff in Europe.

Now the time seems to have come for a major change in the business scope. The ice cream division had a turnover of EUR 7.9 billion in 2023, but its profit margin is much lower (about half) than that of the personal care unit. It is also a seasonal and capital-intensive business that requires more complex cold chain logistics.

A margin problem that does not seem to frighten large private equity funds, which are on the hunt for realities where they can operationally improve the business and deploy significant amounts of their ever-growing capital pools.

The problem on Israel

Moreover, the sale of the unit would take the headache away from Unilever, which has faced controversy over the political positions taken by Ben & Jerry's: in December 2022, Unilever settled a court battle after the brand objected to the sale of its products in the Israeli-occupied West Bank. The separation of the ice cream business is the latest in a series of moves by Unilever to rationalise its portfolio since it rejected an unsolicited takeover bid by Kraft Heinz in 2017. In subsequent years, it sold its margarine business to KKR and subsequently its tea productions to CVC.