Unilever is set to close its ice cream factory in Bulgaria in anticipation of the upcoming spin-off of its consumer goods division later this year.
The production will be transitioned to a facility in Romania following the closure of the Bulgaria site in April, according to a spokesperson for Unilever. The spokesperson refrained from confirming whether this was part of a larger consolidation strategy within the ice cream sector.
Unilever initially revealed its plans to separate the ice cream division in March of last year, labeling it a demerger. The London-listed entity put to rest rumors in November that it might entertain selling the ice cream division to private equity firms, establishing instead that a separate listing is expected by the end of 2025.
The owner of renowned brands such as Ben & Jerry’s and Magnum confirmed in November its intentions to separate its ice cream business unit in India from Hindustan Unilever and pursue a local market listing.
Furthermore, Unilever has engaged in a “business transfer agreement” with PT The Magnum Ice Cream Indonesia, which will act as the local holding company overseeing the ice cream unit and its assets.
Unilever did not comment specifically on the potential impact on jobs resulting from the closure of the facility in Bulgaria.
The spokesperson elaborated, stating, “Unilever has decided to relocate ice cream production from Veliko Tarnovo in Bulgaria to other factories within the group network, including Betty Ice in Suceava, Romania, by April 2025.”
They further noted, “This move aims to create production synergies and ensure sustainable development in the long term. The variety of products for Bulgarian consumers will remain unchanged, and Unilever will continue to invest in the region, providing beloved products while making a positive societal impact.”
In related news, reports surfaced on January 31 that Unilever is contemplating a New York listing for its ice-cream division once it is separated.
However, a report from Bloomberg, citing unnamed sources, suggested that the fast-moving consumer goods major might explore a dual listing in both the US and Europe, potentially in London or Amsterdam.
In response, Unilever opted not to comment on the report. A spokesperson stated, “No decision has been made and therefore we’re not commenting.”
Analysts from Barclays’ European consumer staples team, led by Warren Ackerman, examined the implications of such listings. They stated, “We would prefer a clean sale or joint venture of ice cream, with the proceeds returned to shareholders in a substantial buyback.”
They identified that a listing in Amsterdam could result in tax consequences, forming a “potential liability” of €2bn ($2.1bn). Barclays estimated this could elevate the valuation multiple to approximately 15 times EBITDA to offset tax leakage.
“We would favor a joint UK/US listing as this would likely mitigate flow-back risks, considering the UK is Unilever’s primary listing with around 70% of shareholders based in the US and UK,” the team added.
The potential of solely listing in the US might lead to a higher valuation in the future; however, this is not guaranteed due to current GLP-1 concerns impacting food stocks in the US. Yet, doing so could increase flow-back risks, forcing some UK and European stakeholders to sell.
Ice cream is a substantial segment for Unilever, generating €7bn in revenue over the first nine months of 2024, with underlying sales growth of 3.6%. In comparison, Unilever’s nutrition unit, containing brands like Marmite and Knorr, achieved €9.9bn in sales, and reported a USG of 2.6%. Overall, the group’s revenues totaled €46.4bn with a 1.3% USG.
