Consumer goods group Unilever is delaying its spin-off of the Magnum ice cream because of the U.S. government shutdown, the company said on Tuesday according to a Reuters report.
Unilever, which is the maker of Dove Soap and Hellman’s mayonnaise, has said the U.S. Securities and Exchange Commission (SEC) was currently unable to declare effective the registration statement required for shares of The Magnum Ice Cream Company to be listed and traded on the New York Stock Exchange. This is the latest example of the disruption of business due to the shutdown which shows little sign of ending.
The primary listing was originally scheduled for Nov. 10 in Amsterdam with secondary listings planned in New York and London. This demerger will create a standalone, publicly traded ice cream company comprising brands such as Magnum, Ben & Jerry’s, Cornetto, and Wall’s.
READ: Indian convict arrested by ICE amid government shutdown (
Shareholders will receive one Magnum share for every five Unilever shares held. Unilever plans to retain a minority stake of under 20 per cent for up to five years, to be gradually sold to cover separation costs and support capital flexibility. Unilever said that the preparatory work remains on track and that it still aims to complete the separation within 2025.
Analysts believe that the spin-off will benefit Unilever and Magnum by allowing both businesses to become more focused. “We’re not concerned by the delay,” said Anna Farmbrough, UK Quality Portfolio Manager at Unilever investor Ninety One. “The timing of the listing isn’t especially important in the broader context — what matters is the quality of the underlying business and its long-term growth prospects.”
READ: Social Security announcement delayed amid government shutdown, affecting millions (
This underscores how the U.S. government shutdown has been disruptive to businesses and the economy. The three-week shutdown has hit IPOs, aviation and is expected to cost the U.S. economy as much as $15 billion a week in lost output. Recently, Seoul-headquartered green energy and technology company DeepGreenX Group withdrew its registration statement for a direct listing in the United States on Monday, due to being unable to communicate with SEC staff.
The shutdown is also affecting various other areas. For instance, it is delaying the announcement of the annual Social Security cost-of-living adjustment for tens of millions of beneficiaries. Originally scheduled for Wednesday, the 2024 Social Security COLA announcement will now be on Oct. 24. It is timed to the September Consumer Price Index, which also has not yet been released.