Unilever (NYSE: UL) has initiated preliminary discussions with buyout firms regarding the potential sale of its ice cream business, valued at approximately $19.4 billion. The company has begun management presentations with interested parties, including private equity firms Advent International, Blackstone (NYSE: BX), Cinven, and CVC Capital Partners. Other firms like Clayton Dubilier & Rice and KKR (NYSE: KKR) are also evaluating the asset.
A formal sale process is expected to commence in the latter half of the year, though no final agreements have been reached. Both Unilever and the buyout firms have declined to comment on the matter.
This move aligns with Unilever's new CEO Hein Schumacher's strategy to drive growth and address underperformance. Appointed after activist investor Nelson Peltz joined the board, Schumacher has also announced plans to cut 7,500 jobs and reduce office staff in Europe by a third.
The ice cream division, which includes brands like Ben & Jerry’s and Magnum, generated sales of €7.9 billion ($8.6 billion) in 2023 but has a profit margin significantly lower than Unilever’s personal care unit. The business is also seasonal and capital-intensive, requiring complex logistics.
Unilever has indicated that a demerger creating a newly-listed entity is the most likely outcome, although it has previously sold other slow-growing units to buyout firms. Large private equity funds are eager to acquire such assets to improve operations and deploy their capital.
The sale would relieve Unilever of the controversies surrounding Ben & Jerry’s political stances, including a legal dispute over sales in the Israeli-occupied West Bank. This divestment is part of Unilever's broader strategy to streamline its portfolio, following the sale of its margarine and spreads business to KKR in 2017 and its tea unit to CVC in 2021.
In related industry news, several investment firms have made bids for Sanofi SA’s consumer health division, valued at up to €15 billion ($16.3 billion). Additionally, PAI Partners is in talks to establish a new fund for its 50% stake in an ice cream joint venture with Nestle SA, valued at about $10 billion.
Unilever's potential sale of its ice cream business marks another significant step in its ongoing efforts to optimize its portfolio and focus on higher-margin segments.
