Introduction to The Magnum Ice Cream Company
The Magnum Ice Cream Company (TMICC) has completed its spinoff from Unilever, resulting in a slight fall in its shares on debut. Following the demerger, shares in the Netherlands-based company will be traded for the first time, creating the world’s largest ice cream company, controlling around a fifth of the global market.
Market Performance
Primary Magnum shares in Amsterdam opened at €12.20, less than the reference price of €12.80 set by the EuroNext exchange, but later settled just above that level, giving it a market value of €7.9bn. The company is also listed in London and New York. Unilever shares fell 3.1% against the FTSE 100 following the spin-off.
Focus on Consumer Brands
The spin-off will allow London-based Unilever to focus on its wider range of consumer brands, including Marmite, Dove Soap, and Domestos. The decision to spin off the ice cream division, made in early 2024, places greater focus on a market that is expected to grow by up to 4% each year through 2029.
Dispute with Ben & Jerry’s
However, TMICC has been weighed down by a long-running dispute with the co-founders of Ben & Jerry’s, which now falls under the TMICC umbrella and accounts for 14% of group sales. Unilever bought the US brand in 2000, but the relationship has been sour since then, although an independent board was created at the time to protect the brand’s social mission.
Controversy and Tug-of-War
The most high-profile controversy occurred in 2021 when Ben & Jerry’s decided not to sell ice cream in the Israeli-occupied Palestinian territories, saying sales would be "contrary to its values." Unilever responded by selling the business to its licensee in Israel. A series of arguments resembling a tug-of-war ensued, with Magnum defying repeated demands from Ben & Jerry’s co-founders to sell back the brand.
Removal of Independent Board Chair
Magnum and Unilever argue that Ben & Jerry’s mission has gone beyond what was acceptable in 2000, as the brand has become a one-sided advocacy group on polarizing issues that could cause reputational and business damage. TMICC is currently attempting to remove the chairmanship of Ben & Jerry’s independent board. Last month, it was said that Anuradha Mittal "no longer meets the criteria" for office following internal investigations.
Financial Performance and Future Prospects
Magnum boss Peter ter Kulve said, "Today is a proud milestone for everyone associated with TMICC. We have become the global leader in ice cream as part of the Unilever family. As an independent listed company, we will now be more agile, focused, and ambitious than ever before." Commenting on the demerger, Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said, "TMICC already has positive free cash flow and is intrinsically profitable. The balance sheet is in good shape, but dividends are not possible until 2027 as the group finds its footing as a standalone company." This could result in some downward pressure on the share price in the short term as dividend-focused investment funds that hold Unilever receive TMICC shares which they may be forced to sell in order to fulfill their investment mandate.
