U.S. government shutdown delays Unilever’s Magnum ice cream spin-off

Consumer goods group Unilever is delaying the spin-off of its Magnum Ice Cream unit due to the U.S. government shutdown, it said on Tuesday, the latest example of global business disruption from the impasse that shows little sign of ending.

Unilever, the maker of Dove soap and Hellmann’s mayonnaise, said the U.S. Securities and Exchange Commission was currently unable to declare effective the registration statement required for shares of The Magnum Ice Cream Company to be listed and traded on the New York Stock Exchange.

The primary listing was originally scheduled for November 10 in Amsterdam, with secondary listings planned in New York and London. Unilever will retain a 19.9% stake in the ice cream business that includes Magnum, Ben & Jerry’s and Cornetto.

Cost to U.S. economy

The delay underscores the disruptions caused by the three-week U.S. federal government shutdown, which has hit IPOs, aviation and is expected to cost the U.S. economy as much as $15 billion a week in lost output.

Seoul-headquartered green energy and technology company DeepGreenX Group withdrew its registration statement for a direct listing in the United States on Monday, due to being unable to communicate with SEC staff.

The Magnum stand-alone ice cream business is a test for investor appetite for a sugar-heavy product in its biggest market at a time when U.S. President Donald Trump’s administration is pushing to ‘Make America Healthy Again’.

Analysts expect the spin-off will benefit Unilever and Magnum by allowing both businesses to become more focused.

Unilever said preparatory work for the demerger was on track and progressing well, and that it remained committed to completing the spin-off process this year. The company’s shares were down 0.8% on Tuesday, only slightly lagging rivals.

“We’re not concerned by the delay,” said Anna Farmbrough, UK Quality Portfolio Manager at Unilever investor Ninety One.

“The timing of the listing isn’t especially important in the broader context — what matters is the quality of the underlying business and its long-term growth prospects.”

U.S. IPO reviews halted during shutdown

The U.S. market regulator has halted IPO reviews during the shutdown, although earlier this month it eased the way for firms to proceed with listings despite the political gridlock.

Companies are normally prevented from debuting on Wall Street during periods when Congress has not approved funding for government operations, because officials are unable to review and approve registration statements.

That has prompted investor concerns that partisan gridlock in Washington could dent the IPO market.

Companies can allow their statements to become effective automatically, which involves setting their IPO pricing 20 days before the listing instead of finalizing it on the eve of a SEC review, but that can heighten the risk of filing errors or overlooked disclosures.

Despite the delay, Unilever held a general meeting on Tuesday at which shareholders voted in favor of the proposed consolidation of its share capital. However, the implementation timeline for that will also be revised, Unilever said.