Now Unilever Plans to Sell off its Margarine Business

Business

UK’s one of the most renowned household brand Unilever is yet again in news. After avoiding a takeover by the US food giant Kraft Heinz the company looks to make some serious corrections. The Anglo-Dutch firm is reportedly planning to sell off its entire margarine business starting with Flora and Stork.

It is quite clear that Kraft Heinz’s acquisition bid triggered a sense of urgency to reinvigorate the company’s diminishing image in the global food and beverage market. The move to discontinue margarine business is likely to fetch around $6bn (£4.8bn) to the company. Moreover, the company is considering to change its emphatic status as a dual-listed structure in both Netherlands and the UK.

The senior management in Unilever believes that the company has always benefited from its operational model, which is primarily focused on attaining optimum efficiency. However, this decision is unlikely to affect company’s long-term business approach that exemplifies creation of brand value exercising sustainable models.  Moreover, resisting the colossal takeover bid from Kraft Heinz has given the company more purpose to going forward. The company currently estimates a cost-cutting margin that will reach near about 20% by 2020. Smaller business segments often become liability than an asset, especially for a company as big as Unilever, which has been making major losses from its margarine business.

Meanwhile, the plans to scrape off it dual-listing structure also indicates that it will try to persuade more investors in the forthcoming terms. In most cases, investors do not prefer dual-listed companies as they require additional costing as well as involve an offal lot of complexities that usually comes when backing up two corporate entities. Sometimes it also used to fend off acquisition bids. Undoubtedly, the company must have understood the complexities of having a dual-listed structure when Kraft Heinz approached it.