Magnum maker Unilever faces investor unrest over plans for a £6 billion ice cream spin-off

Doubts are simmering over the spin-off of Unilever’s ice cream business as the £95 billion giant prepares to unveil its first-quarter trading statement on Thursday.

The consumer goods company is facing unrest over plans to divest its £6 billion ice cream division, saying some major investors could become forced sellers if the company were to list in Amsterdam.

And US activist investor Nelson Peltz may not be reassured by the latest moves to reshape the company. This despite the withdrawal from the doctrine of ‘purpose’ – City-speak for woke – announced on Friday.

The group is reducing its green commitments in response to a backlash from consumers, politicians and shareholders around the world.

The sell-off of the ice cream division – which includes Magnum, Wall’s and Ben & Jerry’s – should allow Unilever to focus on its other ‘power’ brands, such as Dove soap and Hellmann’s mayonnaise.

But to top it all off for the troubled British markets, this company could perhaps make its stock market debut in Amsterdam. At least that is what Unilever’s CEO Hein Schumacher has hinted at in recent days.

Avoiding London could do further damage to British markets, which have seen a shift to New York as companies seek higher share valuations.

Ali Mortazavi, boss of E-Therapeutics, a biotech company heading to the US, has described the UK market as ‘completely broken and closed’. Even Shell has suggested it could favor Wall Street.

But to date, many managers of major funds that own shares in Unilever, such as Fundsmith and Lindsell Train, have not pushed for London’s ice cream sector to go public.

This despite the potential threat to the value of their funds’

shares in all British listed companies if Unilever chooses Amsterdam.

Terry Smith of Fundsmith, a fierce critic of the former management’s woke attitude, makes no comment. Others are speaking out.

Chris Beckett, head of equity research at financial planner Quilter Cheviot, warned of the risks of an IPO outside the UK. He said: “If you list a company you are spinning off in a market where your investor base is less likely to hold shares, those investors will try to sell the shares in the spun-off company.

“Such sales are unlikely to be good for the share price, which may not improve until these investors withdraw.”

Nick Train of Lindsell Train says the ice cream sell-off shows bosses’ ambition to maximize the potential of other parts of the Unilever empire.

Ben van Leeuwen, deputy director of the Lindsell Train Global Equity fund, says: ‘For now we are waiting to see what the actual separation mechanism will be. But the ice cream segment contains some iconic brands – and we trust that this value will be properly recognized when the separation ultimately takes place in late 2025.”

Unilever said in February it expected sales growth this year to be within the multi-year range of 3 to 5 percent. It also announced a £1.3 billion share buyback program for later this year.

On Thursday, analysts will look for further improvements in Unilever’s operating margins, ahead of Peltz’s response. He is head of Trian hedge fund and

Unilever is the largest holding company. After the defeat of his proxy campaign at Walt Disney, the 81-year-old Peltz must now prove his mettle to Trian investors, who pay high fees for performance.

The combative investor may have won a seat on Unilever’s board. But shares remain at the same level as when he arrived in January 2022.

Trian investors may have been hoping for rewards similar to Peltz’s at Procter & Gamble, where his push for reorganization produced a 50 percent increase in the stock price while he was on the board.

It is possible that Peltz can be reassured by next year’s spin-off of the slow-growing ice cream company, which also owns the American brands Breyers and Popsicle.