Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a994914

Life after Kraft: Unilever reviews its options

Leading investors hope Unilever's review will spur the business to create even more value for shareholders.

 
Life after Kraft: Unilever reviews its options

(Update) Fund managers hope Unilever (ULVR) will realise value within its business, following Kraft Heinz's (KHC.O) failed $143 billion bid.

On Wednesday Unilever's shares jumped close to the record high reached last Friday, after the consumer goods giant pledged a swift review of its business following its rejection of a bid from Kraft Heinz.

Shares in the Anglo-Dutch ice-cream-to-deodorant group climbed 5.5% or £1.96 to £37.83 on Wednesday afternoon, recouping virtually all of their declines over the preceding days after it issued a statement promising a ‘comprehensive review’ for the benefit of shareholders. Shares closed at £37.97 last Friday after Kraft’s bid attempt was confirmed. The consumer goods group finished the week down from Wednesday's highs, at £37.64 per share.

‘Unilever is conducting a comprehensive review of options available to accelerate delivery of value for the benefit of our shareholders. The events of the last week have highlighted the need to capture more quickly the value we see in Unilever,’ it said

‘We expect the review to be completed by early April, after which we will communicate further,’ it added.

The speedy inquiry raises the possibility of a disposal or spin-off of its food business which is lower margin business than personal care products, where it could boost growth with an acquisition.

Unilever has many supportive long-term shareholders, such as fund manager Nick Train, but this week its management team led by chief executive Paul Polman has been under pressure to reward that loyalty and show it can deliver more value for investors’ money locked in its many brands.

Time for change

Citywire A-rated Daniel Roberts, manager of the Fidelity Global Dividend fund , hopes the failed bid will spur Unilever into action to  realise value within the company.

‘It could prompt it to split food and household products division to realise the market value,’ he said.

Alternatively, Unilever could explore a different route and look at potential acquisitions, he added.

Roberts bought into Unilever a few weeks ago after spotting a valuation opportunity. It now represents a 1.5% position in the Fidelity Global Dividend fund.

Steve Clayton, manager of the HL Select UK Shares fund, agrees that the Kraft bid was not high enough for Unilever's ‘exceptional business’, as its well-loved brands translate into high margins and strong cashflows.

Sign in / register to view full article on one page

3 comments so far. Why not have your say?

FrankFrank

Feb 22, 2017 at 18:39

The only things I know Kraft make are some awful tinned ham and tasteless cheese slices, probably those things served at McDonald's (95% fat, 5% cheese).

But they are good at closing down the factories they promise to keep open, I grant them that.

report this

Grumpy Old Man 2

Feb 22, 2017 at 20:56

I WENT MAD WHEN I HEARD THE OFFER FROM KRAFT. I WORKED FOR UNILEVER BACK IN THE 1960s. TO ME, UNILEVER IS AN ANGLO DUTCH TREASURE, NOT TO BE DESTROYED BY A DISHONEST USA BUSINESS WHICH RENEGED ON CADBURY. IT'S GOOD NEWS THAT UNILEVER IS WAKING UP TO A BETTER FUTURE AND I HOPE THEY SUCCEED.

report this

William Phillips

Feb 23, 2017 at 15:06

Ridiculous, unnecessary response.

Unilever is one of the steadiest Eddies in the world as big corporations go. Having seen off these Americo-Brazilian pirates, why would it panic and fiddle about with a formula that produces 5-10% pa growth year after year, through thick and thin?

As a shareholder I hope this 'review' is mere gesture politics to the nanosecond-trading fidgets of the market, and that its conclusion is a two-fingered gesture to speculators: 'steady as she goes'.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the funds

  • Investec UK Equity Income I Inc 2 GBP
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Neptune UK Opportunities A Acc GBP
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Rathbone Income ACC GBP L
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • HL Select UK Shares A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Fidelity Global Dividend A GBP Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Unilever PLC (ULVR.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • ITV PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Nick Train
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Daniel Roberts
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Steve Clayton
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Carl Stick
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet