This article first appeared on GuruFocus.
Magnum (NYSE:MICC) began its first day as a standalone business after separating from Unilever (NYSE:UL), and its initial valuation landed lower than some analysts had expected. Shares opened at 12.20 in Amsterdam before moving slightly above a 12.80 technical reference price, implying a 7.9 billion market value. Early trading momentum across Amsterdam, London and later New York suggested investors were possibly aligned with a debut valuation designed to balance two forces: attracting medium-term growth investors while absorbing forced selling from index-related funds that may not be able to hold the stock. Analysts noted this valuation approach could be strategic, especially as Magnum is not expected to qualify for benchmarks such as the FTSE 100 or Stoxx Europe 50, which could trigger the sale of roughly 30 million shares.
Jefferies estimated that Monday’s pricing falls near the midpoint of its published 10 to 15.5 range, adding that a more settled price could take at least a week to form. Magnum’s listing arrived a month later than planned after delays tied to the US government shutdown, and it represents a structural reset for a business that had been Unilever’s least profitable division. The company owns Ben & Jerry’s and Cornetto, and years of heavy production and storage demands have pressured profitability. Management now sees independence as a chance to reinvest in product innovation and new growth initiatives, rather than remain bound by the tighter return and cash-flow focus that characterized its years inside Unilever.
Magnum is targeting annual organic growth of 3% to 5% beginning next year, broadly aligned with the global ice cream market, as well as free cash flow of 800 million to 1 billion in 2028 and 2029. The company’s CEO said margins needed to improve by 400 to 500 basis points, and faster growth was required to meet the unit’s potential. Analysts noted that ice cream faces headwinds from health trends and the rise of weight-loss drugs, but the leadership team is regarded as capable and possibly well positioned to use independence as an advantage. Unilever shareholders received one Magnum share for every five shares they own, marking the conclusion of a multi-exchange spinoff designed to simplify Unilever’s business after years of modest stock performance.
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