Unilever spinoff Magnum Ice Cream debuts on Amsterdam stock market
Packets of Walls Cornetto, Magnum and Ben & Jerry’s ice cream are displayed on March 20, 2024.
John Keeble | Getty Images News | Getty Images
Magnum Ice Cream Company debuted on the Amsterdam stock exchange on Monday, completing its long-awaited spinoff from Unilever as it looks to reinvigorate growth amid challenges from health-conscious consumers and high-profile public spats with Ben & Jerry’s.
The stock opened at 12.20 euros, slightly below its reference share price of 12.80 euros. It was last trading at 12.87 euros as of 10:30 a.m. London time, giving it a market capitalization of about 7.9 billion euros ($9.2 billion). Secondary listings are also taking place in London and New York.
“We became the global leader in ice cream as part of the Unilever family,” CEO Peter ter Kulve said. “Now, as an independent listed company, we will be more agile, more focused, and more ambitious than ever.”
Unilever first announced plans to spin off its ice cream unit, which includes Ben & Jerry’s, Magnum and Cornetto, in March last year. The company is now the world’s largest standalone ice cream business.
“The reason that Unilever decided to spin off Magnum is really because they haven’t been able to focus on it,” RBC’s James Edwardes Jones told CNBC’s “Squawk Box Europe.”
“They haven’t had the bandwidth to accommodate Magnum at the same time that they’re really pushing ahead on their personal care strategy. And as a result of that, the idea of the IPO of Magnum is that they’re going to have a dedicated management able to focus on costs, on capital expenditure and so on, really 100% focused on the ice cream business.”
The consumer goods giant faced pressure from investors to overhaul its sprawling business. Its ice cream division, which generated 7.9 billion euros ($9.2 billion) in revenue in 2023, would perform better as a stand-alone business.
Magum in September set a target to grow revenue between 3% to 5% in the medium term from 2026.
“The fact that they’ve been run as an independent business since July this year has really enhanced that ability to focus [on the ince cream business] and on that basis, I think we can see how they could get up to probably the bottom end of that range, but the 3%+ to 5%, that feels very, very ambitious,” said Edwardes Jones.
Challenges ahead
“There’s a strong emerging market angle, and it has a leading market share in its industry, with some very powerful brands,” said Russ Mould, investment director at AJ Bell. “On the downside, you have commodity exposure, you have this governance issue with Ben & Jerry’s, which is a major challenge, and you have a business that’s pretty much weather related,” he told CNBC’s “Europe Early Edition” on Monday.
“Also, there is the suspicion that, given that it has been perhaps run for cash, and it’s a fairly capital-intensive business, there’ll need to be some fairly substantial investment going forward as well.”
The consumer staples category is expected to face challenges due to health-conscious consumers and the booming weight loss drug business pioneered by Novo Nordisk and Eli Lilly. Magnum has suggested that these factors could cost the company about half a percentage point per year in revenue, Mould said, adding that management may come up with new formats to counter the trend.
Magnum Ice Cream now inherits a long-running public dispute with the founders of the almost 50-year-old Ben & Jerry’s.
Founders Ben Cohen and Jerry Greenfield have become increasingly outspoken regarding their dissatisfaction with the direction of the brand they sold to Unilever in 2000. In September this year, they launched a campaign to “Free Ben & Jerry’s” calling for it to become an “independently owned company, with socially-aligned investors.”
“Ben & Jerry’s social mission has always been inseparable from the brand itself, no matter how much Unilever / Magnum have tried to distance the two,” Cohen said Monday.
“[Magnum’s] attempts to dismiss our campaign show that they see the risk our vocal community poses to the rest of their ice cream business. This risk can’t be scooped out, and pretending a spin-off will make it disappear shows how deeply they misunderstand this brand and its supporters.”
Speaking to the Financial Times, Magnum’s CEO Peter ter Kulve called on Ben & Jerry’s co-founders Cohen and Greenfield to “hand over to a new generation.” Cohen responded by accusing Magnum of attempting to silence the brand’s social mission.
— CNBC’s Matthew Ward-Perkins contributed to this report.
