After months of speculation Unilever ULVR announced that its ice cream division will be spun off this year, with a primary stock market listing in Amsterdam.
There were hopes that Unilever would choose London for its main listing amid a tough time for new floats in the City of London.
Still, the ice cream business will have secondary listings in London and New York. Parent company Unilever has its main listing in London, but is also traded in Amsterdam and New York.
Diana Radu, equity analyst at Morningstar, feels that the choice to list in Amsterdam was not a huge surprise.
She points to previous hints made by Hein Schumacher, CEO of Unilever, that it would list in the Netherlands because the division’s headquarters are located there.
The company had also previously made assurances made to the Dutch government, after it moved its primary listing to London in 2020, that any future listing from its food and refreshment division would be made in the European country.
A Blow to the UK’s Stock Market Reputation?
For Daniel Coatsworth, investment analyst and editor in chief at AJ bell, Unilever’s decision is not a negative reflection on the UK market.
“I have seen companies demerge and say they will not be listing in London; UK shareholders are essentially becoming forced sellers. [With Unilever Ice Cream] you have got continuity,” he says.
Last year Unilever announced it would spin off the £12 billion division, which includes brands from Magnum to Ben & Jerry’s.
It comes as Schumacher looks to boost productivity through the demerger of underperforming parts of the business as well as job cuts.
In the most latest results released on Feb.13, the consumer goods company, saw sales rise but profits fall year over year, and investors were concerned about weakness in this financial year.
Key Morningstar Metrics For Unilever ULVR
Analyst: Diana Radu, CFA
- Morningstar Rating: ★★★
- Fair Value Estimate: GBX 4750.00
- Morningstar Uncertainty Rating: Low
- Forward Dividend Yield: 3.09%
- Sector: Consumer Defensive
- Economic Moat: Wide
Yet, Coatsworth believes the demerger could lead to a reversal in the ice cream business’ fortunes.
“It means the management of the ice cream division have the freedom to pursue their own agenda, to make decisions that could accelerate growth, and do things without reporting into a big parent company,” he says.
Unilever Goes Back to Its Roots
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said that Unilever’s roots in the Netherlands go back all the way to its founding in the 1920s.
“But given the perceived ‘dual nationality’ of Unilever, a decision to list in Amsterdam may still be seen as a setback for London, particularly given the recent exodus of firms from the City. But it still earns the stripe of a secondary listing as consolation,” she adds.
The UK’s stock market is stuck in a rut as fewer than 20 companies listed on the main market in London last year, the lowest number since the global financial crisis.
And many UK stocks have been taken private, reducing the number of public companies.
Some, like gambling site Flutter FLUT have opted to move their primary listing from London to capital rich New York. Others, like UK firm Arm Holdings ARM, have chosen to shun London and list in the US.
Yet, there are hopes that 2025 could be a year London listings recover, with buzz that companies like Chinese fast fashion giant Shein, Greek industrials company Metlen Energy & Metals MYTHF, and Santander-backed fintech Ebury could all list in the UK’s capital.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
