The surprise departure of Unilever CEO Hein Schumacher this week is likely to speed up a sell-off of non-core brands such as Marmite and put the prospect of transformational M&A back on the table, according to industry experts.
Schumacher will leave his position at the consumer products group next week, having spent just more than 18 months in the role.
Announcing the changes, Unilever chairman Ian Meakins thanked Schumacher for resetting the strategy and said the board was committed to accelerating the execution of the growth action plan put in place by the outgoing CEO.
The reins will now be taken by CFO Fernando Fernandez, who had impressed with his “decisive and results-oriented approach and his ability to drive change at speed”, Meakins added.
The move suggests a commitment to rapidly optimise Unilever’s portfolio of non-core food brands, senior industry sources and dealmakers told The Grocer.
“There is clearly a mandate for change, and Fernandez will feel empowered to make some bold moves, which will likely see the group emphasising the higher growth and higher margins part of the business,” one City source said.
At a capital markets event in November, Schumacher pledged to streamline Unilever’s portfolio by pruning assets in the food division. At the time, analysts at Barclays estimated €1bn-€1.5bn of food revenues to be non-core – with a particular concentration in Europe.
Food assets in Romania, the Netherlands and Belgium have already been sold, while advisors at Piper Sandler are engaged in exploring a sale of The Vegetarian Butcher.
Marmite, Bovril, Pot Noodle, Colman’s and Maille could now all be fair game, the dealmaker speculated.
“And there is also potential to explore spinning off the entire food division,” the source added.
At the capital markets day presentation, Fernandez told analysts and investors that Unilever was committed to optimising the portfolio through selective bolt-on M&A and sell-offs, but he added transformative acquisitions – in line with the failed £50bn approach in 2022 for GSK’s consumer healthcare business – were “off the table”.
David Hayes at Jefferies questioned whether the departure of Schumacher would lead Unilever to revisit bigger acquisition ambitions.
“This move provides free-range to the board and new CEO to review strategy,” he said. “That may see a different positioning on M&A strategy.”
A senior industry source agreed Unilever would potentially look at a major acquisition to transform the group, with Haleon (the former GSK consumer health arm) an option.
“At some point in next couple of years, a transformative deal is likely to be on the cards, and this change at the top will probably speed up that process,” the source said. “But they will still want to demonstrate an improvement in the core performance as that puts them in the strongest position for investors to be confident any large M&A will actually create value.”
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