Unilever (ULVR) shares jumped close to the record high they reached last Friday after the consumer goods giant pledged a swift review of its business following its rejection of a $143 billion bid from Kraft Heinz (KHC.O).
Shares in the Anglo-Dutch ice-cream-to-deodorant group climbed 5.5% or £1.96 to £37.83 this afternoon to recoup virtually all their decline in recent days after it issued a statement promising a ‘comprehensive review’ for the benefit of shareholders. They closed at 37.97 last Friday after Kraft’s bid attempt was confirmed.
‘Unilever is conducting a comprehensive review of options available to accelerate delivery of value for the benefit of our shareholders. The events of the last week have highlighted the need to capture more quickly the value we see in Unilever,’ it said
‘We expect the review to be completed by early April, after which we will communicate further,’ it added.
The speedy inquiry raises the possibility of a disposal or spin-off of its food business which is lower margin business than personal care products, where it could boost growth with an acquisition.
Unilever has many supportive long-term shareholders such as fund manager Nick Train but this week its management team lead by its chief executive Paul Polman has been under pressure to reward that loyalty and show it can deliver more value for investors’ money locked in its many brands.
As Blake Hutchins, manager of Investec UK Equity Income fund, commented after the Kraft’s approach: ‘Paul Polman and his senior management team have refocused their efforts towards raising free cash flow growth and recent events will only serve to galvanise management and expedite these aims, with shareholders at the forefront of their mind.’
‘It is 88 years old and has some brands that have an incredible heritage, arguably which money can’t buy,’ Mark Martin of Neptune UK Opportunities also commented after Kraft’s failed bid attempt.