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Goodbye, Blue Band: Why Unilever is selling margarine business

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Unilever last week announced the results of its anticipated comprehensive review that came after its surprise bid from US food giant Kraft Heinz Company last month.

While many had expected the Anglo-Dutch consumer goods company to separate its personal products and food businesses, the firm instead decided to isolate its spreads business, indicating that “the future of the spreads business now lies outside the Group.”

The Dutch-British consumer products giant said Thursday it is selling off its underperforming margarine division, just weeks after spurning the takeover bid by US rival Kraft-Heinz.

“After a long history in Unilever, we have decided that the future of the spreads business now lies outside the group,” chief executive Paul Polman said in a statement.

The move came amid a company review launched in the wake of February’s surprise takeover bid by US food and beverage giant Kraft-Heinz. Unilever’s margarines and spreads include such household brands as Flora, along with Blue Band and Rama.

Locally, this will be the seconding time the company is selling off popular brands. In 2002, Unilever Kenya Limited sold off its well known Kimbo and Cowboy cooking fat brands to rival Bidco Oil Refineries Limited, as well as Veebol and Tiger brands.

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The Unilever global spreads unit was set up as a separate unit in 2015 but “remains challenged in developed markets and we have now taken the decision to launch a process to either sell or demerge spreads,” the company said.

The latest moves are aimed at making the company more attractive to investors and forestall any further unwelcome advances from rivals. In February, Unilever snubbed an offer of an 18 percent premium on its share price from Kraft saying it “fundamentally undervalued” the Rotterdam-based group.

The bid, which had valued Unilever at a whopping $143 billion, had “no merit, either financial or strategic, for Unilever’s shareholders. Unilever does not see the basis for any further discussions,” it said at the time.

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Kraft’s pursuit of Unilever would have merged the maker of Kraft cheese and Heinz ketchup to its European counterpart, whose products include Q-tips, Hellmann’s mayonnaise and Ben & Jerry’s ice cream. It came as global food companies struggle with anaemic economic growth in many key markets.

Unilever is listed in both London and on the Amsterdam AEX, where its share price Thursday was slightly lower 0.17 percent in early morning trade at around 46.50 euros a share.

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Unilever was looking at it “with the objective of achieving greater simplification and strategic flexibility.” “We always have worked our operational model and driven efficiency,” Polman told the BBC’s Today programme.

He said Unilever would not change its long-term business model, which he described as one of “sustainable value-creation”. The review is expected to be completed by the end of the year.



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BT Reporter
BT Reporterhttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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