Unilever has put its margarine division, which makes Flora and Stork, up for sale, as it shakes up its business after fending off a $143bn (£115bn) takeover bid from US rival Kraft Heinz.
The Anglo-Dutch consumer group’s underperforming spreads business could fetch up to £6bn in a sale, according to analysts. Private equity firms including CVC and Bain Capital are reportedly circling the division and Kraft could also be interested.
Announcing the outcome of a strategic review, Unilever chief executive Paul Polman said: “After a long history in Unilever, we have decided that the future of the spreads business now lies outside the group.”
Unilever owns a raft of household name products, including Dove soap, Ben & Jerry’s ice cream, Persil washing powder and Marmite.
Polman told BBC Radio 4’s Today programme that the margarine business was a “declining segment” that could be “better managed by others”. Referring to the Kraft bid, he said that “the events of the last few weeks have pointed out that we have opportunities to drive further value in the business”.
Unilever also announced a €5bn (£4.3bn) share buyback and 12% dividend hike this year, in a bid to to placate shareholders angered by its rejection of the Kraft bid in February. It will review its historic status as a dual-listed company in the UK and the Netherlands; combine its food and refreshments operations into one unit; and speed up its cost-savings plan, aiming for a 20% margin by 2020.
At the time of the Kraft bid, Polman called for more help from the government to protect “national champions” such as Unilever.
Neil Wilson, a senior market analyst at spread betting firm ETX Capital, said: “The Kraft Heinz bid was a massive wake-up call. Unilever realised it needed to do more for shareholders but it also has to improve margins – the appeal of Kraft’s bid was being able to squeeze far higher margins out of the business – bribes alone won’t work.
“The test is whether it can achieve underlying operating margin of 20% by 2020 while growing the business in emerging markets. That will generate long-term loyalty better than share buybacks.”