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Two strategic shifts driving Unilever shares higher

Consumer defensive sector giant, Unilever (LON:ULVR), has been on the lips of several pundits over the past few weeks, with the stock looking value-for-money versus the role it plays in the Western retail sector.

Indeed, with a p/e ratio of 17.44, six versus three analyst Buy and Sell stances respectively, and a healthy 3.42% dividend yield, the consumer blue chip is not be sniffed at. Similarly, with its 4,590p share price just 5.56% ahead of where it began the year – versus some of the colossal gains posted by other companies during the pandemic – and 5% short of analysts’ consensus target price of 4,819p, Unilever remains a good-value stock for retail investors looking for a solid foundation.

The company’s price has increased somewhat this week, however, with two strategic developments seeing its stock come back into vogue and rise over 6%. Following the announcement that it would target $1.2 billion in plant-based sales by 2025 last Friday, the company’s shares hit a four-month low of 4,325p. Now, with news released over the last two days, it Unilever stock has seen something of a resurgence.

On Thursday, the company announced that it had agreed to acquire Californian nutrition business, SmartyPants Vitamins. Though the terms of the acquisition, and regulatory approval, have yet to be confirmed, the non-profit-backed health business will help to bolster Unilever’s ethical offerings by providing expectant mothers and children in need with affordable health goods.

Speaking on the deal, Fabian Garcia, President of Unilever North America, said: “We are delighted to welcome SmartyPants Vitamins to the Unilever family and our portfolio of purpose‐led brands. SmartyPants Vitamins aligns strongly with our mission to improve the health and wellbeing of consumers and empower people to take charge of their health with solutions they can understand and trust.”

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On Friday, the company announced that its shares would trade on the Amsterdam exchanger for the final time on Friday. The group said it would be merging its UK and Dutch arms amid an uncertain macroeconomic landscape, marred by a pandemic downturn and disruptive Brexit proceedings. The owner of PG Tips, Vaseline, Ben & Jerry’s, Hellmann’s, and Lynx said the merger will help provide extra flexibility in acquiring and exiting businesses, as well as more unified corporate governance and reduced complexity.

Speaking last month, ahead of merging the 90-year-old hybrid company, the group said: “The boards consider that unification is in the best interests of Unilever, its shareholders and other stakeholders taken as a whole.”

Though both strategic shifts indicate positive changes within the company, the latter could pose some considerable challenges, given that four previous chief executives had tried and failed to get rid of the company’s hybrid structure. Regardless, investors responded neutrally to the news, with Unilever shares exactly flat by mid-afternoon on Friday 27/11/20.