The world’s biggest ice cream maker hopes the future’s sweet

This report is taken from this week’s CNBC UK Stock Exchange newsletter. Like what you see? You can subscribe here.

Mission

Fans of ice cream brands like Magnum, Cornetto, Carte D’Or, Ben & Jerry’s, Breyers and Wall’s can now own shares in them outright following Monday’s merger of Magnum Ice Cream Company (TMICC) from former parent Unilever.

In one of the most exciting stock market events of 2025, TMICC shares have made their debut on the Euronext stock exchange in Amsterdam, and there are also secondary listings in London and New York – where Peter ter Kolff, CEO, will ring the opening bell today. (It will also be live on CNBC’s Squawk on the Street at 3 p.m. GMT/10 a.m. ET.)

The listing, the largest on Euronext this year, valued TMICC, the world’s largest ice cream producer, at 7.8 billion euros ($9.1 billion).

But what are the future prospects for the newly separated company and for Unilever itself?

Neither question can be easily answered.

First: TMICC, where even short-term stock price forecasts are unpredictable. The company itself has warned that it will not qualify for indices such as the FTSE 100, and there may be an initial selling by tracker funds unable to hold shares. The lack of dividend distribution in 2026 will also deter some investors.

Unilever and its banking advisers have sought to address this problem by setting a low reference price for TMICC shares, so some bargain hunters may intervene. And it’s cheap: Including debt, TMICC is worth little more than the second-largest player in the $87 billion global ice cream market, Froneri, a British-based joint venture between Nestlé and PAI Partners, the French private equity firm. Its global market share is 11% compared to TMICC’s share of 21%.

Regarding the trade outlook, there are also headwinds, most notably the growing popularity of weight-loss drugs.

Before the merger, Ter Kulf downplayed these risks, arguing that over the years TMICC had evolved its portfolio to include more low-sugar, higher-protein or portion-controlled products. Examples include Breyers Carb Smart ice cream, which is higher in protein, or Ben & Jerry’s moving from pint jars to ice cream on sticks.

The CEO is targeting medium-term organic annual sales growth of between 3% and 5%, compared to the long-term average of 3% achieved under Unilever.

There may also be opportunities for TMICC, as a more focused business, to increase investments in its supply chain, as there has been little overlap with Unilever’s other businesses, which could lead to it being overlooked. This applies to the broader investing story.

As Chris Beckett, a consumer staples analyst at wealth management firm Quilter Cheviot, said: “While Magnum has not thrived under Unilever ownership, there is some hope that a revitalized management team – although mostly made up of former Unilever employees – will produce better operating performance.”

There is another potential thorn in Ter Kulf’s side. Ben & Jerry’s, which was purchased in April 2000 from founders Ben Cohen and Jerry Greenfield, became increasingly problematic.

In 2021, the duo briefly banned Unilever from selling the product in Israeli settlements in the West Bank, before the ensuing backlash prompted Unilever to sell the Israeli arm of the brand to a local licensor. Greenfield left the business in September this year, while TMICC said last month that Anuradha Mittal, Ben & Jerry’s independent chairman, “no longer meets the criteria” for the service, without giving further details.

In a typical piece of Dutch plain language, Ter Kolve told the Financial Times on Monday that the couple should “hand it over to a new generation.”

He warned that TMICC may not continue to contribute to Ben & Jerry’s Charitable Foundation unless corporate governance deficiencies identified in the recent review are addressed.

The dispute is another reason Unilever is happy to get rid of TMICC – returns have been lower than in its other businesses, although it retains, for now, a 19.9% ​​stake, which will be sold over the next five years.

Long overdue reclassification?

But the bigger question is whether Unilever’s recent reshaping will lead to a rerating by the market. I have been covering the fortunes of this company for more than 30 years and have witnessed countless attempts to make it happen.

Coming up, there were purchases in 2000 of Ben & Jerry’s, Slim-Fast (since sold) and Best Foods, which brought Unilever the Hellmann’s brand; The fateful $1 billion Acquisition of Dollar Barber Club In 2016; and the acquisition of healthy snack brand Graze in 2019, which has since been sold again.

It got out the door through Unilever’s specialty chemicals business, which was sold to ICI for £5 billion ($6.66 billion) in 1997; Its ubiquitous businesses – including the Flora brand – were sold to KKR for €6.7bn in 2017, and more recently, the £3.8bn sale in 2021 of Unilever’s black tea business, owner of popular brands such as PG Tips and Liptons, to private equity firm CVC.

Not to mention a whole host of small disposals, such as Ambrosia Creamed Rice and Brown & Paulson Cornmeal, both sold to Premier Foods in 2003 and Birds Eye Frozen Foods, which was offloaded to Permira in 2006.

In the middle, there were many strategic reforms.

Terry Smith, whose investment firm Fundsmith is one of Unilever’s 10 largest shareholders, noted last year that they included the 2010 Unilever Sustainable Living Plan, the 2016 Connected 4 Growth and the 2022 Unilever Compass Sustainable Growth Strategy.

However, none of it was as important as the move, five years ago, to a single company structure, which ended the 90-year-old arrangement between the two companies – Britain’s Unilever and Dutch Unilever – and provided more flexibility for the companies.

Dismantling TMICC seems almost fundamental.

In one dose, this raises the quality of Unilever’s earnings, making it more focused on the two dozen brands that account for three-quarters of its annual sales. Of these, 12 companies have annual sales exceeding €1 billion, including Dove, Omo and Domestos.

As Fernando Fernandez, the new CEO and a man in a hurry, noted on LinkedIn on Monday: “For Unilever, this milestone allows us to further sharpen our focus in building a portfolio of strong brands with an unparalleled geographic footprint and superior growth prospects.”

It is worth noting that only two of these billion-euro brands – Knorr and Hellmann’s – are in their own food division. Other food brands, including Marmite, Colman’s mustard and Bovril, are said to be already on sale. If the TMICC spin-off doesn’t lead to a rerating, it wouldn’t be surprising if Unilever becomes a beauty, pure luxury, personal care and home care business, with its entire foods division a distant memory.

Top TV picks on CNBC

James Edwards-Jones, managing director at RBC Capital Markets, discusses Unilever’s decision-making process to spin off its ice cream business.

Visa is moving its European headquarters from Paddington to London’s Canary Wharf financial district, leasing 300,000 square feet of space for 15 years at One Canada Square from 2028.

Massive fiscal stimulus and low interest rates would lift demand and growth globally, but protectionism and geopolitical turmoil would lead to higher inflation, says Paul Skinner of Wellington Management.

– Katrina Bishop

Need to know

The UK wants to release more nuclear power. Britain once had more nuclear power plants than the United States, the Soviet Union and France combined. In 2023, the country produces only 14% of its energy from nuclear energy, and it wants to Increasing this percentage to 25% by 2050.

Canary Wharf in the UK is becoming more attractive for businesses. Once hollowed out by the coronavirus pandemic, London’s answer to Wall Street is undergoing a transformation Renewed interest. Visa is moving its European headquarters there, while JPMorgan plans to build a new tower in the area.

[PRO] A British travel company could see its share price double. Alex Wood, co-founder and chief investment officer of Kernow Asset Management — a contrarian stock picker — said the stock is “significantly undervalued,” and gives it a better chance. An increase of 468% over the next five years.

—Yu Boon Ping, Katrina Bishop

Quote of the week

In the markets

London-listed stocks reversed course this week, with… FTSE 100 index Losing 0.62% since last Wednesday. The index closed 0.03% lower at 9,642.01 on Tuesday, falling short of reaching the 10,000-point level.

WPP shares rose 6.3% on Tuesday after the advertising and communications giant secured a lucrative contract to manage advertising strategy for the UK government. The four-year deal, said to be worth up to £2 billion ($2.7 billion), will see WPP-owned agency Wavemaker oversee a wide range of media and advertising campaigns for the government.

Meanwhile, Unilever It was one of the main stocks to rise on the FTSE on Tuesday, rising 3.6% as the ice cream company’s spin-off shares took a hit. Magnum Ice Cream Company It debuted on the London, New York and Amsterdam stock exchanges on Monday.

the British pound It fell slightly against the US dollar during the week, trading at $1.3296 on Tuesday, compared to $1.3352 last Wednesday.

Return on the UK Government Index 10-year bonds – also known as government bonds – rose over the same period, to 4.511% from 4.480%.

-Hugh Lisk

Coming

December 12: Monthly UK GDP estimate and trade data for October
December 15: Rightmove house price index for December
December 16: Unemployment data for October

– Katrina Bishop