Patrick Lai’s Post

🚨FOOD INDUSTRY NEWS🚨 Unilever has kicked off initial discussions with buyout firms about a possible sale of its ice cream business, which could be worth as much as £15 billion ($19.4 billion), according to people familiar with the matter. The consumer goods company has started holding management presentations with potential bidders. Private equity firms Advent International, Blackstone, Cinven and CVC Capital Partners Plc are among those that have shown preliminary interest.🍦 #manda #icecream #sale #foodindustry #newsletter

Interesting story in FT that Private Equity not interested in Unilever’s ice cream business. “an executive at one private equity firm [said] that [they] had explored a potential deal with Unilever, adding it was not clear how a buyout group could approach the business ‘differently to the current management’. They said that it would be difficult to make ice cream less of a seasonal product in Europe.” NSS!!!! 🤣🤣🤣 Haven’t these people heard of Baked Alaska ??? Honestly, buy an apple-pie company to go with it - I thought they were “mergers” experts ??? For a few quid l’ll give them sight of the thesis I wrote for the MBA I couldn’t finish in the mid ‘90s because I was usually hungover and I developed a rash on my neck from the polo neck sweaters that were obligatory in the case study classes. In it I proposed a business plan to extract value from “hitherto unspotted latent synergistic opportunities and early wins apparent in a merger”between the Fever Tree and Gordon’s brands … I proposed a classic sum-of-the-parts valuation (basically 3:1 - any more tonic and it is like club soda and any less and it takes the back of your throat out) I also suggested some bolt-on acquisition low hanging fruit we could finance via tranching - aka add a slice of lemon 😎

Separations can be a once-in-a-lifetime opportunity to create value for the remaining and separated companies. Consumer goods giant Unilever said it will split off its ice cream unit — which includes Ben & Jerry’s, Magnum and Breyers — as part of a restructuring affecting up to 7,500 mostly office-based workers around the world. The company’s turnaround plan is expected to finish by the end of 2025, delivering cost savings of around $868.3 million. Nestle also split off its ice cream business through a joint venture with a private equity firm. Ben & Jerry's is likely to go public this year as a result of a spinoff from its parent company Unilever. This will become the only pure play on ice cream in the stock market. The ice cream category had particularly struggled in the recent high-inflation environment, as many consumers switched to more cost-conscious supermarket labels. It’s also a seasonal, capital-intensive business requiring more complex cold-chain logistics. Ice Cream is characterized by a frozen supply chain, a very different channel landscape, and an inherently seasonal pattern of sales. Given these distinct operating characteristics, Ice Cream will likely flourish even more under an ownership structure better suited to its specific characteristics and market positions. #demerger #carveout #consumerproducts #strategy #operatingmodel Quaestor Consulting Group ("QCG") is a premier transformation, restructuring, and business advisory firm that maximizes value creation by offering clients in businesses and real estate invested in or owned by alternative investment firms a streamlined approach to transformative leadership and sustainable growth. This article is being made available for informational purposes only and should not be construed as legal, regulatory, tax, accounting, or investment advice on any subject matter. The information provided expresses the views of the author as of the date indicated and such views are subject to change without notice. QCG has no duty or obligation to update the information contained herein. Certain information contained herein is based on or derived from information provided by independent third-party sources. QCG believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. QCG makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss.

Carve-outs present private equity (PE) investors with significant upside for superior returns; they also pose specific risks and challenges. Inherent to carve-out transactions are a greater degree of complexity and uncertainty. Buyers need a defined strategy and well-developed approach to capitalize on and maximize the opportunities carve-outs present. This means that carve-out due diligence should become a key part of the process. Precisely because the opportunities are so great in separations—when every support cost is on the table and a highly technical, bottom-up analysis is so essential—it’s possible to overlook the personal aspect that can make or break a separation. Research shows that about 70 percent of the time, transformations beyond the separation context fail, and that the human element is a critical reason why. It’s natural for people to resist change and be skeptical of separation. Yet separations can unlock tremendous value for the carve-out company and are a unique opportunity to shake off old perceptions about the “right” support structures and systems. The transactions can be uniquely fortuitous for employees, as well: a chance to break free from old expectations, benefit from a fresh start, and help build something new. The odds for success improve when the separate company adapts a cost structure and culture that befits its specific needs—not those of the original conglomerate. Newly divested businesses can continue to generate and even grow revenues with a much smaller, more appropriate support structure. With the right mindset and expertise, carve-outs can help make your bold merger, acquisition, and restructuring aspirations a reality. Solving complex issues is at Quaestor Consulting Group (QCG)’s core and we do it with a bias to action and execution. Our consultants offer over 100 years of combined expertise and seasoned leadership with deep #carveout, #restructuring, and #projectmanagement experience to uniquely position our clients to achieve growth through financial management, compliance, and execution. We favor results over process by generating financial and operational alignment, resolving conflicts, removing barriers, and measuring dollars of value to define success so they can maximize value creation post separation.

In a strategic move , Unilever unveiled a major restructuring plan on Tuesday, announcing the spinoff of its ice cream unit—home to iconic brands like Magnum and Ben & Jerry's. This restructuring not only involves operational changes but also raises legal complexities, particularly regarding trademark ownership. Whether the ice cream business becomes a standalone entity or is picked up by another, the process of assigning trade marks to the new owner will be critical. #intellectualproperty #trademarks #foodandbeverages

Unilever shifts strategy: ice cream unit to spin-off, not sale! Unilever has changed course on its €15bn ice cream division, opting to spin off the unit into an independent listing rather than sell it to private equity. CEO Hein Schumacher views this move as part of a broader turnaround strategy that includes 7,500 job cuts, primarily in Europe. The ice cream division, home to brands like Ben & Jerry's, Magnum, and Wall’s, represents 16% of Unilever’s overall sales. Despite high interest, the division's complexity, seasonal dynamics, and the political stances of some brands made the sale challenging. Notably, Ben & Jerry’s filed a legal complaint against Unilever over governance disputes. Interestingly, Unilever's Q3 saw a 9.8% surge in ice cream sales, far exceeding analyst expectations. The company plans to finalize the spin-off by the end of 2024, ensuring shareholder value remains a priority. Unilever has a track record of private equity deals, such as the €7bn sale of its spreads business to KKR and the €4.5bn sale of its tea business to CVC. However, spinning off the ice cream unit aligns with the rising trend of demergers in FMCG, offering potential for strategic growth as an independent entity. The global ice cream market, valued at $68bn in 2023, is set to grow at a CAGR of 5.2% through 2030. Trends show rising demand for health-conscious options, including vegan and low-fat alternatives, alongside robust premiumization. The Asia-Pacific region is a growth hotspot, while e-commerce and sustainability initiatives are reshaping market dynamics. Unilever's decision reflects the potential of standalone growth in a sector where innovation and consumer preferences are key. The spin-off, slated for completion in 2024, could unlock significant shareholder value. #unilever #icecream #benandjerrys #fmcg #ecommerce #magnum #strategy #spinOff #retail #foodbusiness #investors #privateequity #retailtech #foodtech #europe #globalbusiness #turnaround #corporatestrategy #logistics #supplychain #consumerbrands #ipo #salesgrowth #brandmanagement #marketing #uk #europa

Unilever Begins Talks With Potential Buyers Of Ice Cream Unit Unilever is reported to have begun initial discussions with buyout firms about a possible sale of its ice cream business, which could be worth as much as £15bn. The move comes months after the consumer goods group’s new Chief Executive, Hein Schumacher, unveiled his plan to accelerate growth after years of lacklustre performance, including separating off its non-core ice cream arm, which makes brands such as Wall’s, Magnum and Ben & Jerry’s. At the time, the group said a final decision on how the business would be spun off had not yet been taken, with a demerger touted as the most likely separation route. However, according to sources quoted by Bloomberg, Unilever has started holding management presentations with potential bidders for the business, which generated sales of nearly €8bn last year. Private equity firms such as Advent International, Blackstone, Cinven, CVC Capital Partners, KKR, and CD&R are said to be among those that have shown preliminary interest. The report stated that a formal sale process is likely to start in the second half of the year. Sources noted that deliberations are in the early stages, and no final agreements have been reached with any of the parties. Commenting on the story, Jefferies analyst David Hayes suggested the plan to sell the ice cream unit may face a bumpy road due to a potential price mismatch. Unilever is reportedly seeking as much as €18bn for the division. However, Jefferies analysts argue that Unilever’s asking price relies on “out-of-date benchmarks” from 2019 ice cream divestments. Hayes suggests a more realistic figure of €13.5bn. He highlights two key factors undermining Unilever’s valuation. Firstly, the “rich multiples” in 2019 do not resemble the “very different discount environment.” Secondly, the analyst raises concerns about changing consumer preferences toward healthier options, which could be impacted by rising weight-loss drug usage. NamNews Implications: * The marked interest by PE firms will put downward pressure on a possible sale price… * …especially given the steep rises in borrowing rates in the past two years. * Added to which, any drawn-out sale process will cause internal issues re staff motivation. - i.e. the good guys leave… - …as others cannot. #IceCream #Unilever #PrivateEquity

The CPG industry is poised for transformation in numerous aspects. The recent news of restructuring at Unilever is just one example of the changes expected within the CPG industry, all pointing towards positive developments aimed at promoting growth for every company involved. Additionally, these opportunities may pave the way for technological advancements that benefit both firms and contribute to their future. #CPG #CPGIndustry #Unilever #BenAndJerry

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Where P&G lead others follow? Divesting brands, some of which were recent acquisitions was a radical move by AG Lafley before handing over to David Taylor and arguably set him up for success. The large FMCG business model and operating machine isn't set up to support "small" brands. Whilst scale brings benefits, budget, focus and priorities mean that smaller brands just don't get the attention they need in a big organisation. Unilever then followed suit and now Reckitts. Cillit Bang and other brands will make a great acquisition for someone, but they will need to understand the brand proposition and invest accordingly.