HUL Board approves demerger of ice cream business into separate entity; stock up 1%

FMCG major Hindustan Unilever Ltd (HUL) on Monday said its board has approved the demerger of the ice cream business, which owns brands such as Kwality Wall's, Cornetto and Magnum, into an independent listed entity.

Shares of the company closed 1.2% higher at ₹2,471.45 on Monday, November 25, and opened 0.6% higher at ₹2,486.25 on Tuesday on the NSE.

The stock hit an intraday high of ₹2,494.95 during the morning session on November 26.

Demerger details

The existing shareholders of the FMCG major will receive shares in the new entity in proportion to their shareholding in HUL, according to a company statement.

However, the demerger process will be subject to the necessary approvals and procedures to be followed in accordance with the applicable laws, it added.

Earlier on October 23, HUL said it has gone for a valuation of the ice cream business, which contributes around 3% of the topline, to have a fair idea.

It was trying to maximise value for all shareholders, based on the recommendations of the Independent Committee, the board will determine the mode of separation by the end of this year.

"The Board considered different modes of separation of the Ice Cream business and after due consideration, with a view to maximising value for all the shareholders, the Board has accorded in-principle approval to demerge the business," said HUL.

It has also authorised HUL’s management to undertake preparatory steps required for the demerger of the Ice Cream business.

The HUL board last month decided to demerge the ice cream business, based on the recommendation of the Independent Committee, which was formed by the FMCG major earlier in September this year.

The Independent Committee has said the Ice Cream business has a different operating model including cold chain infrastructure, and a distinct channel landscape, which limits synergies with the rest of the business operations of the company.

Earlier this year, HUL's parent entity, Unilever PLC, had expressed its intention to separate its global ice cream business across jurisdictions.

For the financial year, which ended in March 2024, HUL's revenue from the sale of products was ₹59,579 crore.