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Unilever to sell off spreads business

By Louis Gore-Langton , 06-Apr-2017
Last updated on 06-Apr-2017 at 14:56 GMT2017-04-06T14:56:20Z

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The Anglo-Dutch food giant has announced its intention to sell off its spreads business as part of a range of new moves following a failed acquisition attempt by KraftHeinz.

Unilever announced this morning it would be 'setting the bar higher' by restructuring the business, buying back shares, selling its margarine brands and reaffirmed its growth targets for investors.

The most notable announcement was that the corporation would be letting go of its spreads business, which includes brands like Flora and Stork. In a statement, Unilever CEO Paul Polman said that based on a strategic review, the company had determined that “After a long history in Unilever, we have decided that the future of the spreads business now lies outside the group.”

Analysts have predicted the eventual sale of the spreads companies could bring in around €5.5bn.

The report also stated a more extensive review of the company’s divided structure, which runs conjointly between London and Rotterdam, would also be under way. Polman said, “We will look to increase our strategic flexibility for further portfolio optimisation through a review of the dual-headed legal structure, with a view to simplifying it.”

Unilever has been dual listed since a merger between the British soap firm Lever Brothers and Dutch margarine company Margarine Unie in the 1930.

The BBC reported that Polman had described the spreads business as a ‘declining segment’, which analysts report has seen sales drops particularly in the US.

Restructuring and selling weaker segments of the business may be a way to reassure investors following the refused takeover offer at the start of this year, in which Unilever turned down a $143bn mega merger bid from KraftHeinz.

The report also announced that Unilever would be buying back €5bn worth of shares over the remainder of 2017, and that expected sales growth for 2017 remains at 3 – 5% - despite “continued challenging market conditions.

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