An acquisition of The Magnum Ice Cream Company in the near future seems unlikely, according to investment bank Jefferies. If the company were to come under new ownership before the end of 2027, the new owners could face a substantial tax bill from the US tax authorities. This is linked to a Tax Matters Agreement. The investment bank estimates that the amount involved could be as high as €1.5bn.

The Tax Matters Agreement published by the US Securities and Exchange Commission states that the spin-off of the ice cream division as The Magnum Ice Cream Company was a tax-free spin-off from the parent company Unilever.

Had the division been acquired by investors at the end of last year, Unilever would have faced a substantial tax bill. If the spun-off company is acquired within two years, the US Internal Revenue Service may retroactively classify the spin-off as an acquisition.

The Magnum Ice Cream Company agreed to the Tax Matters Agreement, thereby undertaking to refrain for two years from certain actions that could lead to a tax reassessment. The company also agreed to indemnify Unilever against any taxes should the spin-off retroactively lose its ‘tax-free’ status.

Photo: TMICC