Unilever offloads frozen foods
key brand Captain Bird's Eye, halting speculation of a venture
capital takeover bid for the whole company.
It is thought the manufacturer behind Ben and Jerry's icecream and Colman's mustard will announce details of the sale at the end of the week when fourth-quarter trading results are issued.
The frozen foods business has annual sales of around £1.4 billion, but has been underperforming in recent years as European consumers opt for fresher alternatives.
Possible buyers could include FoodVest, the acquisitive arm of venture capital outfit CapVest that recently bought frozen foods firm Findus from EQT.
Anglo-Dutch Unilever has been looking to sell the division to concentrate on staple brands such as Hellman's mayonnaise, as spiralling production costs continue to shrink profit margins. Unlike rivals Kraft and Nestlé the company has not passed these rising overheads on to consumers.
Last month analysts mooted the idea that venture capitalists may seek to buy the company, worth £40bn, and sell it off piece by piece.
But news that the frozen foods division has found a buyer for Bird's Eye and Austrian and Dutch brand Iglo, suggests the company is sticking to its five-year plan, started in 2000, aimed at bringing growth through culling its 1600 lines down to 400.
The growth plan was intended to free up resources to allow for an increased marketing budget and to offset rising production costs, but analysts believe the company has been too slow to shake off unprofitable smaller labels.
The company's unusual structure is cited as a key factor in its inability to change rapidly to meet market demands.
"The difficulty Unilever has had shaking off unprofitable lines may be due to its slightly different structure. It effectively operates as a joint company from the Netherlands and Britain," Datamonitor's John Band told FoodandDrinkEurope.com.
"Many city analysts believe this makes it more difficult to implement changes, whereas Nestlé and Kraft are more centrally managed."
Unilever, which has a £3.4 billion pension fund deficit, is part of the Unilever Group owned by the Netherlands-based Unilever NV and UK-based Unilever Plc. It has two global divisions, Home & Personal Care and Food.
Its packaged foods business is the world's third largest after Nestlé and Kraft. The company's brand names for fragrances, frozen foods, soap, and tea include Calvin Klein, Flora, Dove, and Lipton.
