Unilever shares up on bid rumours

Shares in consumer products giant Unilever were today testing eight-year highs amid a raft of takeover speculation surrounding the group.

The stock rose more than 3%, with high volumes of shares changing hands, as talk began to circulate about the potential for a separation of the group’s foods and consumer goods businesses.

Investors believe a split would make the company far more attractive to private equity firms.

Even without a split, rumours placed the group as the next big private equity target following recent big moves by buyout firms.

City speculation was sparked by the recent announcement from Cadbury Schweppes regarding plans to split its business in two.

The Dairy Milk maker said on Thursday that it was looking into separating its American beverages business from its confectionery division, adding that it would provide further details in June. Shares in Cadbury jumped on the news yesterday, closing up 3%.

Unilever, based in Merseyside, is best known for its food brands Magnum and Ben & Jerry’s Ice Cream, Slimfast, Knorr, Bertolli and Hellmann’s. Its consumer products division includes Vaseline, Dove, Comfort and Cif.

This is not the first time Unilever has been in the spotlight for takeover rumours after it hit the headlines as a private equity target a year ago. However, most investors shunned the idea at the time.

But, the Independent newspaper reported today that a private equity bid for the group could be one of the largest deals taken on by the industry.

Unilever had a market value of more than £19bn (€27.8bn) at the start of trading today.

Collins Stewart analyst Rob Mann said: “Unilever has been a badly managed company and there were times over the last five years where the company either had to get its house in order or someone else would come along and do it for them.

“It is now doing a better job than it has before and any potential bidders have missed the opportunity to have a crack at the business. A break up of the group seems obvious but they could do that themselves.

“Why would management give up the ghost now when they didn’t in more challenging times and why would shareholders agree to a deal now when things are starting to go well?”

Unilever declined to comment.

In February, Unilever posted a 3% rise in turnover to €39.6bn with pre-profits up 7% to €4.8bn.

Its shares were 49p higher at 1533p.