(Bloomberg) -- Unilever’s India unit will spin off its ice cream business into a listed firm to unlock its full potential, as a part of a global shakeup in the segment.
“The demerger of the ice cream business will create a leading listed ice cream company in India,” Hindustan Unilever Ltd. said in a statement Monday, adding that this will “have focused management with greater flexibility to deploy strategies suited to its distinctive business model and market dynamics.”
HUL shareholders will get shares in the new entity in proportion to their holding in the company, it said in the statement, without specifying the ratio. The decision will be placed before the board of directors for approval early next year.
The action in India is a part of Unilever’s global plans to spin off the ice cream business to improve its profitability as opposed to selling the unit. Parent Unilever Plc has 20% share of the 83 billion euro ($87.3 billion) ice cream market globally, according to Bloomberg Intelligence.
Ice creams in India, including brands such as ‘Kwality Walls,’ ‘Cornetto,’ and ‘Magnum,’ are a “high-growth business” with a mid- to high- “single digit” profitability, HUL said in the statement. The unit in India will continue to work with the global business, it said.
The Mumbai-based firm has missed profit estimates for four straight quarters amid slowing consumption demand across India for goods from cars to cookies.
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