By Nkiruka Nnorom
The plan by Unilver Nigeria Plc to divest from its spread business will help the company to maximise value for all its stakeholders, say capital market operators.
They said it is common for businesses to realign their operations, but the problem arise if the outcome of the divestment does not yield commensurate dividend or income to the company.
“Unilever is into so many businesses and my understanding is that it is the food side they are exiting. And actually, there is one food company from South Africa they bided, but they couldn’t get it. So, they realised that since they cannot get it, they should relinquish the food side of their business. That one is called realignment,” said Mallam Garba Kurfi, Managing Director, APT Securities Limited.
“You have to get your priority right. Look at what Dangote Flour Mills did. When they realised that they will be nowhere with noodles, they decided to exit it and allow it to follow noodles that is popular so that they will concentrate on pasta and flour.
That also is what is called realignment; if you are in business and you realise that a portion of the business does not align with other portions of the business, or you have a better option of it, why don’t you divest and concentrate on where you will do more,” Kurfi added.
Another stockbroker who preferred anonymity said that the divestment is not likely going to have any negative impact on the company, “except if they divest and they are not going to yield commensurate dividend”.
Unilever had said that the divestment was part of the outcome of the strategic review embarked on by the Group, while assuring that the move would not affect the activities of Unilever Nigeria Plc.
Chairman, Marjin Dekkers, said the proposed sale of the spreads business and other restructuring were fully supported by the Board of Directors.
According to him, the review that the board of directors has undertaken has been detailed and comprehensive and it has confirmed that the Group’s model of long-term shareholder value creation has been successful and remains as valid as ever.
Chief Executive Officer, Unilever, Paul Polman, said the Group has decided that the sale of the spreads business would lead to accelerated development of its portfolio.
“After a long history in Unilever, we have decided that the future of the spreads business now lies outside the Group,” Polman said.