Consumer goods group Unilever is delaying the demerger of its Magnum ice cream unit due to the US government shutdown, it said today, marking an early example of business disruption from the impasse that shows no sign of ending.
Unilever, the maker of Dove soap and Hellmann's mayonnaise, said the US 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 listing of the ice cream business that includes brands like Ben & Jerry's and Cornetto was originally scheduled for November 10 in Amsterdam. Secondary listings for Magnum are also planned in New York and London.
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, with further updates on the revised schedule to be provided as soon as possible.
The US market regulator has halted IPO reviews during the shutdown, although earlier this month it eased the way for companies 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.
However, companies can allow their statements to become effective automatically, which involves setting their IPO pricing 20 days before the listing instead of finalising it the night before after a US SEC review.
Despite the delay, Unilever confirmed that the general meeting of shareholders to vote on the proposed consolidation of its share capital, which is related to the demerger, will still take place today. However, the implementation timeline for that consolidation will also be updated.
The most prominent corporate impact of the 20-day US government shutdown has been on airlines as air traffic control staffing shortages delay travel at airports.
The US government has said the shutdown may cost the economy as much as $15 billion a week in lost output.
