Unilever Restructuring Includes Selling Off Spreads and €5bn Share Buyback Program

06 Apr 2017 --- Following a strategic review prompted by the Kraft Heinz takeover approach earlier this year, Unilever is selling off its spreads business including well known margarine brands like Flora and Stork. Unilever CEO Paul Polman says the review has also highlighted opportunities for “accelerated development” of Unilever’s portfolio and that the future of the Spreads business “now lies outside the Group.”

Kraft Heinz Co. withdrew its US$143 billion bid for Unilever two days after the approach became public in February. Defending itself against the approach, Unilever announced it was to carry out a root and branch review which immediately started speculation about what asset sales it would carry out.

Today’s (Apr 6) confirmation from the Anglo-Dutch company says the review has been detailed and comprehensive. 

“It has confirmed that our model of long-term shareholder value creation has been successful and remains as valid as ever. The actions we are now going to take are fully supported by the Board,” says chairman Marijn Dekkers.

Unilever also announced that it’s launching a €5 billion share buyback program and raising its shareholder dividend 12% to reflect “increased confidence in the outlook for profit growth and cash generation.” 

“Our recent review concluded once more that our strategy for long-term value creation through growth and compounding returns on investment is the right one for Unilever and for our shareholders. It also highlighted the opportunity to go faster and further,” adds Polman. 

“The progress already made with Connected 4 Growth allows us to now accelerate the program. This will be further enabled by the next step, which is the establishment of an integrated Foods & Refreshment unit, a leaner and more focused business that will continue to benefit from our global scale and footprint. This acceleration allows us to unlock sustainable value faster and target an overall underlying operating margin, which excludes restructuring, of 20% by 2020. Progress and performance will be reported on with greater granularity in our financial communication.”

“The review has also highlighted the opportunity for accelerated development of our portfolio. After a long history in Unilever, we have decided that the future of the Spreads business now lies outside the Group. We will look to increase our strategic flexibility for further portfolio optimization through a review of the dual-headed legal structure, with a view to simplifying it.”