Unilever to spin off ice cream division into new company

What would Unilever do for a Klondike bar? The answer, apparently, is not much, after the company announced on Tuesday that it plans to divest its entire ice cream division.

By the end of 2025, the CPG giant will create an entirely new business from its ice cream division, and possibly sell it, per the Wall Street Journal. The move is part of a restructuring plan that will shed 7,500 jobs and save $870 million over the next three years.

• This means Unilever is doing away with brands such as Ben & Jerry’s, Popsicle, Klondike, Breyers, and Talenti.
• The restructuring plan, which is expected to run for the next three years, is Unilever’s attempt to focus on its other, more desirable categories under its stable of brands that include Dove soap, Hellmann’s mayo, and Tresemmé haircare products.

“As a standalone, more focused business, Ice Cream’s management team will have operational and financial flexibility to grow its business, allocate capital and resources in support of the company’s distinct strategy, including further optimising its manufacturing and logistics network, and developing wide-reaching, flexible, distribution channels over and above the changes that are currently under way in the business,” the company said in a statement.

A bit of drama: Unilever CEO Hein Schumacher, who took over less than a year ago, has also recently been butting heads with the board over his compensation this year, according to a report that revealed he could take home nearly $19 million. However, that payout is mostly dependent on Unilever seeing a 50% raise in its share price this year, Fortune reported.

• That’s an uphill battle considering that the company’s share price has declined in the past few years, and Unilever’s market cap has dropped 4% in the last year.
• News of the ice cream divestiture drove a 3% rise in the share price on Tuesday.

Zoom out: Unilever is the latest major CPG company to spin off part of its business. Kellogg’s cereal business, now known as WK Kellogg, started trading publicly last October. In that instance, the demerger actually lost Kellogg’s, now known as Kellanova, $1.3 billion in value. Since then, their value has gone back up. As of Tuesday, Kellanova’s market cap was $18.7 billion, and WK Kellogg’s was $1.5 billion.