HUL to spin off ice cream business into separate entity
What's the story
Hindustan Unilever Limited (HUL) has announced plans to spin off its ice cream business into a standalone entity. The company's board has given preliminary approval for the move, which is aimed at enhancing value for shareholders. The final decision on the demerger will be made after seeking approval from both the board and shareholders in early 2025.
Share distribution
Shareholders to receive shares in new entity
HUL has assured that its shareholders will be allotted shares in the new entity, in accordance with their current shareholding in HUL. The company believes that this separation will unlock fair value for its shareholders. It also gives them an opportunity to stay invested in the growth journey of the ice cream business.
Business performance
Ice cream business: A high-growth segment
HUL's ice cream business is considered to be a high-growth business, with popular brands such as Kwality Wall's, Cornetto, and Magnum. These brands supposedly function with 'mid to high-single digit profitability.'
Future prospects
Demerger to form leading listed ice cream company
HUL expects the demerger to create a leading listed ice cream firm in India. The new company will have a focused management team with greater flexibility to execute strategies, suited to its distinct business model and market dynamics. The move comes after Unilever's global decision to separate its ice cream business, including brand and technology ownership.