Unilever's ice cream spinoff Magnum valued at €7.8bn in debut 

The company spun off from Unilever is debuting a month later than initially planned due to US shutdown

Peter ter Kulve, CEO of The Magnum Ice Cream Company, and his team rang the bell during a ceremony on Monday morning to celebrate the listing of The Magnum Ice Cream Company on the Euronext in Amsterdam. Picture via Euronext

Unilever Plc’s spinoff The Magnum Ice Cream Co. was valued at €7.8bn in its market debut on Monday, after a separation aimed at giving the world’s biggest ice cream company a platform to revive its performance as a standalone firm.

Magnum shares opened at €12.20 in Amsterdam on Monday, before rising to trade slightly above the technical reference price of €12.80. Shares also opened in London, and were set to start trading in New York later Monday as part of the triple listing. The reference price is a figure calculated by Magnum and Unilever’s advisers that was used as a indicative price ahead of the start of trading.

The company, which owns the Ben & Jerry’s and Cornetto brands, is debuting a month later than initially planned after the listing was delayed by the US government shutdown. Magnum is planning to use its newfound independence to focus on boosting its growth, after having been Unilever’s least profitable division.

“Our mission is very clear: the business was not growing fast enough. It needed to grow 1% to 2% faster and profitability was 400, 500 basis points too low,” Magnum’s chief executive Peter ter Kulve said in an interview Monday morning before markets opened. 

“We can now build a strategy and execution model that is perfect for ice cream and our job to be done, and not part of a diluted strategy as part of a broader group.” 

For Unilever’s shareholders, the spinoff comes after years of lacklustre share price performance. Investors are being handed one share in Magnum for each five shares they own in the parent company.

Magnum could be valued between €10.1bn and €10.8bn, analysts at Barclays Plc wrote in an October note.

Unilever decided to split off its ice cream unit last year as part of efforts to streamline its business and revive growth. The ice cream business’ high production and storage costs have weighed on margins in recent years. 

Magnum is targeting annual organic sales growth of 3% to 5% from next year, broadly in line with the global market, and free cash flow of between €800m and €1bn in 2028 and 2029.

The ice cream category is “perceived to have challenges” from health-conscious consumers and weight-loss drugs, as well as being a capital-intensive business, Jefferies analysts including David Hayes wrote in a note. But they see the management team as “well regarded” and say the company can now reinvest in growth, after focusing on returns and cash under Unilever.

The debut ends what has already been a lengthy separation process for Magnum, which was briefly considered for a sale to private equity in 2024, then settled on a three-exchange spinoff that was further delayed because of the US government shutdown.

Trading could be impacted by technical selling over the coming days. Unlike Unilever, Magnum is unlikely to be included in the UK’s FTSE 100 index or the Stoxx Europe 50 index, which could lead funds designed to track those benchmarks forced to sell the shares, JPMorgan Chase analysts led by Pankaj Gupta wrote in a note.

It would be an example of so-called flow back — when investors are handed a share that falls outside of their mandate, forcing them to sell it. In total, there will be an expected selling of about 30m shares as a result of index changes, the JPMorgan analysts wrote. The company will have about 612.3m shares in issue when it lists, filings show.

Shares are set to start trading across all three exchanges under the symbol MICC.

Bloomberg