Here's how analysts reacted to Unilever's proposed spread sale

Helen Cahill
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Unilever is trying to convince investors after a takeover attempt by Kraft Heinz (Source: Getty)

Unilever announced it is spreading the love this morning, as it has started searching for a buyer for its Flora and Stork brands following a review of the business.

The consumer goods giant has shaken-up its business in response to a failed takeover bid from Kraft Heinz.

Read more: Unilever shake-up: Spreads brands to be sold and €5bn share buyback starts

And, aside from committing to a sale of spreads, Unilever has sweetened the deal for investors, promising a 12 per cent hike of its dividend. The group is also undertaking a review of its dual listing.

Neil Wilson, senior market analyst at ETX Capital, said the merger approach from Kraft Heinz had "shaken things up" at Unilever.

"The Anglo-Dutch giant wants to make sure shareholders are not tempted by another bid and is throwing cash at the problem with a 12 per cent bump in dividends and a €5bn share buyback," he said.

"It smacks a little of short-termism but we have to see whether the offloading of spreads and higher gearing pays off as it looks to grow its business in emerging markets, where it generates 57 per cent of sales and where future growth needs to come from."

Read more: Unilever explores £6bn sale of brands such as Flora after Kraft Heinz saga

Andrew Wood, analyst at Bernstein, said he was pleased that Unilever management had not over-reacted to the merger bid by setting themselves unrealistic goals, and had not decided to undertake "defensive M&A" in response to Kraft Heinz.

The "big news", however, is not the sale of spreads or Unilever's review of its dual listing, Hargreaves Lansdown analyst George Salmon said.

"The big news for shareholders is the more aggressive plans for increasing profitability," he said. "While the group is set to take on more debt, a series of efficiency drives means it is confident of some pretty chunky increases in profitability in the coming years.”

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