One of the bigger holdings in my share portfolios is Unilever; it probably is for many UK stock market investors. It is proposing to demerge its ice cream businesses containing the Magnum and Ben & Jerrys products, followed by a share consolidation. The board has recommended the proposal to shareholders.
This should be a fairly simple business decision. What benefits might transpire from the demerger? Will the ice cream businesses benefit from a clearer focus? They are certainly large enough to stand on their own and existing Unilever shareholders will get shares in the new Magnum company. Are there any synergistic production or marketing costs that will be lost? It is not clear.
Flogging ice cream might be a more seasonal business than selling toothpaste or soap but less so than in the past.
The document Unilever has issued does not provide much information justifying the demerger but I do not feel capable of arguing with the wisdom of the directors in such circumstances.
I have therefore voted in favour of the demerger.
Note that there is some highly amusing bullshit on the Unilever web site about their new marketing model. It reads:
- In-house graphic design studios called Sketch Pro are unlocking new levels of innovation, agility and impact.
- The new approach will support our global portfolio by seamlessly integrating brand strategy, cultural insights, creative excellence and AI innovation.
- For Home Care – a category traditionally focused on functional benefits – this is helping shift the perception of our brands from purely rational to deeply emotive.
- By creating emotionally resonant content and design that further accentuate features like fragrance and aesthetics, we’re shifting consumer perception from purely rational to deeply emotive.
So now you know.
Roger Lawson (Twitter: https://x.com/RogerWLawson )
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