Unilever plans to sell its margarine business for $7.4 billion one month after rejecting a $143 billion takeover bid from Kraft Heinz, British newspapers have reported.
Flora margarine is one of the company’s billion dollar brands, but changing consumer habits have meant that sales have struggled in recent years. Flora sales in the United Kingdom fell 12% last year and sales of its other margarine brands — including Stork, Bertolli, and I Can’t Believe It’s Not Butter — were also down, according to its most recent earnings report.
Margarine was one of the two products originally sold by Unilever when it formed in 1929, following the merger of Dutch margarine maker Margarine Unie and British soap manufacturer Lever Brothers.
A strategic review and restructuring at the Anglo-Dutch consumer goods giant has been fast-tracked after the failed Kraft Heinz bid last month. CEO Paul Polman is said to be looking to return cash to shareholders, cut costs and make medium-sized acquisitions, with the results of the review to be released next month.
The rejected bid has shaken the company – and British industry – revealing the vulnerability of even the country’s most valued firms to foreign buyouts. According to the Financial Times, Polman privately described the offer as a “near-death” experience. In addition to the accelerated business review, Unilever has also asked shareholders to increase their stakes in the company in order to provide greater protection against hostile takeover.
The margarine division represents about 4% of the company’s revenue and was split off into a subsidiary business back in 2014, with its own accounting and management. Unilever controls about a third of the global margarine market and analysts say Kraft Heinz could be a potential buyer of the margarine holdings.
Analysts do not expect Unilever to completely separate its food business from the larger home and personal care segment of its portfolio. Unilever continues to focus on gaining ground in developing markets, which now account for 58% of its sales.