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James Ashton: Break-up shouldn’t be on Unilever’s menu

James Ashton: Marmite-maker Unilever is a prime mover in the food and drink industry: AFP/Getty Images
James Ashton: Marmite-maker Unilever is a prime mover in the food and drink industry: AFP/Getty Images

THE (butter) knives are out for Paul Polman. For some Unilever investors, it seems that merely selling off its underperforming margarine division would be an inadequate response to the $143 billion (£115 billion) Kraft Heinz takeover approach that has thrown the spotlight on the Marmite-to-Magnum maker.

Shareholders are giving voice to a break-up that would create one high-growth firm selling Sunsilk shampoo and Dove soap and another containing Unilever’s food operations that would be more of an income stock. Investment bankers love to slice and dice companies as if they are making a Knorr casserole. Too often, the elusive search for corporate focus succeeds in generating fat fees but also sub-scale companies that are vulnerable to takeover.

The lesson from this Unilever episode is that none of the dwindling band of Britain’s truly global businesses is deemed too big to buy by overseas investors. Why overreact to one approach by carving up the target, only to make its assets more digestible?

It is easy to argue that no British company bar BAE Systems and Rolls-Royce is of strategic importance to the nation. But Unilever is a prime mover in the food and drink industry, the largest manufacturing sector in the country, and maintains two of its six research and development sites in the UK. Scale matters — and so does the location of its headquarters.

The company has reformed in the past, jettisoning its low-growth Birds Eye frozen-food business a decade ago.

It would take a good chief executive to steer the company through a complicated split.

After events of the past two weeks, Polman knows it will take a great one to keep the business largely intact — and transform its performance.