The shareholders of HUL will receive shares in the new entity in proportion to their shareholding in HUL

Fast-Moving Consumer Goods (FMCG) maker Hindustan Unilever Limited (HUL) board has accorded in-principle approval to demerge the ice cream business into an independent listed entity.

The company has proposed that the shareholders of HUL will receive shares in the new entity in proportion to their shareholding in HUL.

“The decision to demerge is subject to the approval of the board and the shareholders to the scheme of demerger to be placed before the board early next year. It considered different modes of separation of the ice cream business and after due consideration, to maximise value for all the shareholders, it has accorded in-principle approval to demerge the business,” the company informed the stock exchanges. 

Ice cream business profitable

The company said that its ice cream business is a high-growth business with Kwality Wall’s”, “Cornetto” and “Magnum”, the business has a mid to high single-digit profitability. 

“The demerger of the ice cream business will create a leading listed ice cream company in India, which will have focused management with greater flexibility to deploy strategies suited to its distinctive business model and market dynamics, thus realising its full potential. A separate listed entity will unlock fair value for HUL shareholders and give them the flexibility to stay invested in ice cream’s growth journey. Demerger will also facilitate a smoother transition for business as well as our people,” the company added. 

Demerger of ice cream business

Further, the board has authorised HUL’s management to undertake preparatory steps required for the potential demerger of the ice cream business including the drawing up of the scheme of arrangement. 

In September,   HUL constituted a committee, comprising its independent directors, to evaluate its ice cream business. The committee was formed to evaluate the prospects of HUL’s ice cream business and to make recommendations to the board. 

Earlier in March, the parent company Unilever had announced to accelerate its Growth Action Plan (GAP) through the separation of the ice cream business. Following separation, Unilever will operate four business groups across beauty and well-being, personal care, home care and nutrition.

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