Unilever plc 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 (US$19.4 billion or RM90.71 billion), according to people familiar with the matter. 

The consumer goods company has started holding management presentations with potential bidders about the business, which is home to brands like Ben & Jerry’s and Magnum, the people said. Private equity firms Advent International, Blackstone Inc, Cinven and CVC Capital Partners plc are among those that have shown preliminary interest, the people said.

Other buyout firms such as Clayton Dubilier & Rice and KKR & Co have also been studying the asset, the people said. A formal sale process is likely to start in the second half of the year, the people said. Deliberations are in the early stages, and no final agreements have been reached with any of the parties, according to the people. 

Representatives of the buyout firms and Unilever declined to comment.

Unilever’s new chief executive officer, Hein Schumacher, in March unveiled an ambitious plan to drive growth and reverse years of lacklustre performance, including separating its ice cream arm. The new chief, who was appointed after activist investor Nelson Peltz took a stake and joined the company’s board, also planned to cut 7,500 jobs - almost 6% of the Dove soap maker’s total of 128,000. Last week, the conglomerate said it’s cutting a third of its office staff in Europe as part of productivity programme announced earlier.

The ice cream division had sales of €7.9 billion in 2023, but its profit margin is less than half that of the company’s personal care unit, according to data compiled by Bloomberg. It’s also a seasonal, capital-intensive business requiring more complex cold-chain logistics. Unilever has said a demerger that creates a newly listed entity is the most likely option for the unit, though it has previously sold other slow-growing businesses to buyout firms.

Large private equity funds are keen to acquire assets from big corporations, as they can then operationally improve the business and deploy significant amounts of their ever-growing capital pools. Several investment firms have made initial bids for Sanofi SA’s consumer health division, with some offers valuing the business at as much as €15 billion, Bloomberg News reported earlier this week. Separately, buyout firm PAI Partners is in talks about setting up a new fund to hold its 50% stake in its ice cream joint venture with Nestle SA valued at about US$10 billion, people familiar with the matter said in May.

Shedding the unit will remove a headache for Unilever, which has had to deal with controversies over political stances taken by Ben & Jerry’s. In December 2022, Unilever settled a court battle with the ice cream label’s independent board, after the brand objected to its products being sold in the Israeli-occupied West Bank.

The separation of the ice cream business is the latest of a number of moves by Unilever to streamline its portfolio since it fended off an unsolicited takeover bid from Kraft Heinz Co in 2017. Later that year, it sold its margarine and spreads business to KKR. Four years later, it agreed to sell its tea unit to CVC.

  - Bloomberg