Unilever’s ice cream spinoff Magnum opens below reference price

Magnum

Unilever Plc’s spinoff The Magnum Ice Cream Co. opened below the reference price 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, below the technical reference price of €12.80 announced on Friday. Shares are also set to start trading in London and New York as part of its triple listing.

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 Officer 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 lackluster share price performance. Its stock opened trading at £43.42 per share in London on Monday. Investors are being handed one share in Magnum for each five shares they own in the parent company.

Magnum could be valued between €10.1 billion ($11.8 billion) and €10.8 billion, 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 €800 million and €1 billion 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 & Co. 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 30 million shares as a result of index changes, the JPMorgan analysts wrote. The company will have about 612.3 million shares in issue when it lists, filings show.

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