Spin offs work particularly well when the original corporate hodge podge obscures the value of one (or more) true gems. That isn’t the case with Unilever’s proposed demerger of its ice-cream business.
Instead of an uplift in valuation, the scoop-out may simply increase investor appetite for bolder action on the group’s bloated portfolio.
Unilever’s plan is best understood as the unwinding of a corporate footprint which made little sense in the first place. Ice-cream — which accounted for 13 per cent of Unilever’s total sales last year — has few synergies with the rest of the group’s home, food and personal care business. It is more capital intensive and volatile, with lower operating margins of 10.8 per cent in 2023, compared with 16.7 per cent for Unilever as a whole.