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Industry NewsWill Unilever spin-off its food business?

Will Unilever spin-off its food business?

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Thursday, March 2, 2017

Unilever is understood to be giving “serious thought” to a spin-off of its food business from its home and personal care units, according to a Sunday Telegraph report.

The newspaper also said the possibility of Unilever’s operations being divided is supported by some of the group’s larger shareholders.

“A spin-off makes sense on paper and if the management can make it work then we would be sold on that. It would be the most palatable option,” Matthew Tillett, fund manager at Allianz, the 14th largest holder of Unilever’s Dutch shares, told The Sunday Telegraph.

Unilever last week launched a strategic review into its business in order to “accelerate” the value it can give to its shareholders, according to a just-food.com report. The move came days after Unilever rejected a takeover approach from Kraft Heinz, which the U.S. food giant then withdrew two days after it became public.

The findings of the review are due to be published in April, and will include an evaluation of the company’s portfolio, according to remarks made last Friday by Unilever CFO Graeme Pitkethly, at the Consumer Analyst Group of New York conference.

“This will include options for our organization, our portfolio, our cost structures and for our balance sheet and use of cash,” Pitkethly said. “We will complete the review, with the board, by early April and then will announce our conclusions. No doubt the coming weeks will include a [lot] of speculation and commentary on the possible outcomes. I am sure you would appreciate it would be quite wrong of me to anticipate the outcome.”

While Pitkethly insisted the Kraft Heinz offer undervalued Unilever, he conceded it represented an “inflection point” for the group to evaluate its long- and short-term value creation priorities.

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