Unilever Delays Ice Cream Spinoff on US Federal Shutdown

A Magnum ice cream Photographer: Hollie Adams/Bloomberg

(Bloomberg) -- Unilever Plc pushed back its demerger of Magnum Ice Cream Co. due to the government shutdown in the US, though it expects to complete the spinoff this year.

The US Securities and Exchange Commission is unable to declare effective the US registration statement required for the ice-cream company’s shares to be admitted to the New York Stock Exchange, the Anglo-Dutch consumer goods company said Tuesday.

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The latest US government shutdown — the third under President Donald Trump — began on Oct. 1 when Congress failed to pass a stopgap funding measure, triggering the country’s first government closure in almost seven years.

The demerger was previously on track for mid-November, with a primary listing in the Netherlands and secondary listings in London and New York. Shares of Unilever fell as much as 1.1% in London on Tuesday, paring its gains since the start of the year to less than 2%.

Unilever is considering a workaround to enable the ice cream company to list on the NYSE, a company spokesperson said. The SEC has created a path for initial public offerings to continue during the government shutdown, though it requires a delay of several weeks after companies disclose terms of the deal before trading can start.

Unilever has been working on splitting off its ice cream division since last year as it seeks to revamp its business and revive sluggish growth. The unit’s performance has been patchy in recent years, in part because of the highly seasonal nature of ice cream. High production costs and storage, as well as surging cocoa prices, have also weighed on its margins and Unilever decided the unit would perform better as a standalone business.

Led by Peter ter Kulve, Magnum Ice Cream has been optimizing its supply chain and building a sales team globally in preparation for the demerger. Sales have started to show improvement recently, including in the US, which is the biggest market for the ice cream brands, which include the Ben & Jerry’s, Breyers and Magnum brands.

Shares in the ice cream unit were scheduled to be listed in Amsterdam, New York and London on Nov. 10. Unilever will hold about 20% of Magnum’s share capital following the split, for up to five years.

--With assistance from Charlotte Hughes-Morgan and Charles Capel.

(Updates with latest trading in fourth paragraph and details on the SEC process in the fifth paragraph.)

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