Magnum Ice Cream, spun off from Unilever, made its stock market debut on Monday with a valuation below some analysts' expectations. The world's largest ice cream maker is seeking to revitalize its performance as an independent company.
Magnum shares opened at €12.20 ($14.22) on the Amsterdam Stock Exchange before rising slightly above the technical reference price of €12.80, giving the company a market capitalization of €7.9 billion. The stock also listed on the London Stock Exchange and is scheduled to begin trading later on the New York Stock Exchange, achieving a triple listing.
The stable early trading suggests investors have accepted the lower-than-expected valuation. Analysts say the pricing balances two factors: "rebalancing selling" pressure (where investors must sell shares that exceed their benchmark index tracking requirements) and market expectations for the company's future prospects.
Fernand de Boer, analyst at Degroof Petercam, who had predicted a €15 reference price, stated: "Setting an attractive valuation helps attract medium-term growth investors while reducing selling pressure from index-tracking funds." The reference price was determined by Magnum and Unilever's financial advisors before listing as an indicative price.
Unlike Unilever, Magnum isn't expected to be included in the FTSE 100 or Euro Stoxx 50 indices, meaning index-tracking funds may be forced to sell their holdings. JPMorgan analysts led by Pankaj Gupta estimated index-related selling could reach about 30 million shares. Regulatory filings show Magnum has approximately 612.3 million shares outstanding.
The valuation also fell below projections by analysts at Oddo BHF and Barclays.
David Hayes, Managing Director of Consumer Goods Research at Jefferies, noted: "We expect Magnum shares won't stabilize until at least next week." The IPO price falls in the middle of Jefferies' €10-€15.5 valuation range issued last Friday.
Magnum owns popular brands including Ben & Jerry's and Cornetto. Its planned July IPO was delayed due to the U.S. government shutdown before completing this month. Previously the least profitable division at Unilever, Magnum now aims to drive growth through independent operations.
In a pre-listing interview, CEO Peter ter Kulve said: "Our goals are clear: we need to accelerate growth by 1-2% and improve margins by 400-500 basis points."
Jefferies analysts, including Hayes, noted in a recent report that the ice cream sector faces challenges from health-conscious consumers, weight-loss drugs, and high capital costs. However, they praised Magnum's management team and believe independence from Unilever will allow greater reinvestment in growth.
For Unilever shareholders, the spin-off comes amid years of stagnant stock performance. Unilever shares opened at £43.42 in London on Monday. Under the separation terms, shareholders receive 1 Magnum share for every 5 Unilever shares held.
Unilever decided last year to spin off its ice cream business to streamline operations and revive growth. After considering a private equity sale, it ultimately opted for the triple-listing approach.
High production and storage costs have weighed on Unilever's margins. Magnum has set targets including 3-5% annual organic sales growth starting next year (matching global market averages) and €800 million-€1 billion in free cash flow by 2028-2029.
Magnum trades under the ticker MICC.