Magnum's $9.1 billion ice cream listing leaves some investors cold

By Alexander Marrow and Dimitri Rhodes

LONDON, Dec 8 (Reuters) - The Magnum Ice Cream Company listed on Monday with a valuation of some 7.8 billion euros ($9.1 billion), below analyst expectations, with some investors unsure its sugar-heavy product can succeed as consumers grow more health-conscious.

The firm, now the world's largest standalone ice cream business, saw its debut in Amsterdam weighed down by index funds exiting after the long-awaited spinoff from parent Unilever. The stock was largely flat at around 12.8 euros a share.

Magnum's listing is a test of its ability to lure consumers to indulgent snacks like its Cornetto cones and Ben & Jerry's ice creams at a time when GLP-1 weight-loss drugs have shaken up consumer trends and the Trump administration is pushing a "Make America Healthy Again" campaign in the United States.

"The sentiment is that people are focusing on healthier lifestyles," Jack Martin, investment director at Unilever shareholder Oberon Investments, told Reuters.

"There are regulatory headwinds against unhealthy foods because of the burden it places on healthcare systems, and GLP-1s are a potential headwind."

SEPARATION COSTS, LACK OF DIVIDEND IN 2026 HIT MAGNUM STOCK

Magnum's stock recovered slightly from a sluggish opening to settle just above the reference price set on Friday, which valued the company at roughly eight times its expected 2025 adjusted EBITDA, according to research firm Morningstar. 

Ahead of the publication of Magnum's prospectus, Barclays analysts predicted it would fetch an equity value of 10.1 billion to 10.8 billion euros and a share price above 20 euros per share.

Magnum rival Froneri, a joint venture between PAI Partners and Nestle, secured investment in October valuing the firm at 15 billion euros. Magnum says it commands around 21% of the $87 billion global ice cream market, ahead of Froneri's 11%.

Limited demand may have impacted the reference price, investment bank Degroof Petercam said in a note, while substantial separation costs from Unilever and the fact there will be no dividend in 2026 could be adding short-term pressure.

Degroof Petercam calculated that Magnum's EV/EBITDA ratio - a key valuation metric - of 8x implied a 41% discount to peers including Nestle, Hershey and Mondelez, which trade at an average of 13.6x. 

"I think that with setting the reference price low, they made the stock attractive for new investors," said Fernand de Boer of Degroof Petercam, adding this had probably helped avoid a share price fall on the debut. 

MANAGEMENT HAS 'WORK TO DO' AS CEO PROMISES MORE AGILITY

Unilever is shedding a business unit whose cold supply chain demands more complex operations than its other food brands and personal care products like Dove soap and Axe deodorant.

Magnum CEO Peter ter Kulve, who wielded a replica Magnum ice cream the size of a tennis racquet at Monday's bell-ringing ceremony, said the company would be "more agile, more focused, and more ambitious than ever" as an independent listed company.

There is hope that Magnum, with a strong brand and market position, can perform better outside Unilever, said Chris Beckett, consumer staples analyst at Quilter Cheviot, although a sugar-heavy product that is often weather-dependent for sales meant a more volatile mix than some peers.

"There will be some natural selling before we see a more stable shareholder base, as everyone who now owns Magnum shares had no choice in the matter as existing Unilever holders," said Beckett.

"For now, it is a bit of a 'show me' story, and the management team will have some work to do."

Investors automatically received one Magnum share for every five Unilever shares they hold. Magnum had warned its stock may face early downward pressure, with its shares not immediately eligible for inclusion in major indices such as the FTSE.

Shares in Unilever, which is retaining a 19.9% stake in the business but plans to exit within five years, edged down 0.5%.

Among its other challenges, Magnum will inherit a prickly relationship with Ben & Jerry's. The Vermont-founded ice cream maker repeatedly clashed with parent Unilever in recent years over political and ethical stances, particularly regarding Israel's war in Gaza.

Magnum said last week that the Ben & Jerry's Foundation, a U.S.-based charitable group funded by the brand, must address deficiencies in financial controls and governance if it is to maintain full funding.

Ben & Jerry's annual revenue of 1.1 billion euros accounts for almost 14% of Magnum's global turnover, compared to just 1.8% of Unilever.

($1 = 0.8584 euros)

(Reporting by Alexander Marrow and Dimitri Rhodes; Editing by Bernadette Baum and Joe Bavier)