Hindustan Unilever Ltd., which makes daily use items like soap and soap. (HUL) has said that its board of directors has approved the separation of the ice cream business into an independent listed unit. The company has ice cream brands like Kwality Walls, Cornetto and Magnum.
Market share is 3 percent
The company said in the statement that its existing shareholders will be given shares in the new entity in proportion to their stake in HUL. However, the process of demerging the ice cream business will depend on the necessary approvals and procedures as per applicable laws. HUL had earlier said on October 23 that it is in the process of determining the valuation of the ice cream business. It contributes about three percent to the company’s turnover.
The company issued a statement
She said she was trying to maximize value for all shareholders. Based on the recommendations of the independent committee, the Board of Directors (Board) will determine the manner of separation of the business by the end of this year. HUL said its board of directors considered various ways to demerge the ice cream business and thereafter has given in-principle approval for demerging the business with a view to maximizing value for all shareholders.
The Board has also authorized the management of HUL to take necessary initial steps for demerger of the ice cream business. The HUL board had last month decided to spin off the ice cream business based on the recommendation of an independent committee. The committee was constituted by the company in September this year.
Will Amul’s tension increase?
Now the thing to be noted here is whether this announcement will pose any problem to those companies which basically work in the business related to ice cream and milk. So the answer is- no. Amul is the market leader company in this segment. Its products are also sold outside India. Its brand value is much higher than HUL’s ice cream business.