Unilever launches £2.5bn shake-up for top brands

Flora and Bertolli may go as group’s shareholders call for radical rethink

CONSUMER goods giant Unilever is on the brink of unveiling a cull of top products including Flora margarine and Bertolli spreads.

A sell-off of the household names could come as early as April as the group battles to reassure its shareholders after last week’s takeover drama.

Unilever shareholders endured a roller-coaster ride after US giant Kraft Heinz launched a £115billion approach a week ago only for Unilever to flatly reject the bid. Just two days later Kraft Heinz announced it was walking away.

Investors were surprised by the speed with which the bid was rejected. They are understood to be demanding an urgent shake-up, prompting Unilever to pledge action within weeks.

Unilever’s spreads division – which includes I can’t believe it’s so Good ... , known until last month as I can’t believe it’s not Butter – is set to be at the top of the ‘for sale’ list. The division has already been split off into a separate subsidiary which makes annual sales of £2.5billion or about a quarter of Unilever’s total food sales.

James Targett, a consumer goods analyst at Berenberg, said the move could be ‘a crowd pleaser’ for Unilever chief executive Paul Polman. A sale of brands would allow Kraft Heinz to pick up some of Unilever’s food business despite having had its full takeover turned down. Targett said investors were revisiting ‘historic’ strategic questions, such as disposal of brands, future acquisitions and even a split of the business.

Spreads are losing favour as consumers cut back on bread or switch to more natural alternatives. The plight was illustrated last month when Unilever renamed its iconic I can’t believe it’s not Butter – pushing it as a baking ingredient.

Targett said Unilever’s refreshment division – which includes ice cream brands Magnum and Carte D’Or – could be in the firing line if investors demand more ‘radical’ changes.

Unilever clashed with Tesco last year over supplying Marmite to stores. It also owns Hellmann’s

and Pot Noodle as well as non-food brands including Dove soap and Domestos.

A City source said: ‘Unilever has dithered over a decision to spin off the spreads division for years and the approach from Kraft Heinz is being regarded by many as a curt invitation to get off the fence.’

Andrew Wood, an analyst at research firm Bernstein, said it was vital that Unilever disposes of its spreads business.

Wood and Targett both said they thought Unilever was unlikely to split the business between its food and personal care brands as has been speculated recently.

Unilever declined to comment. But sources close to the business insist the review will not be concluded until April.