In haste to go Dutch, Unilever miscalculated concerns in Brexit-bound UK

08 October, 2018, 05:08 | Author: Brooke Harris
  • Unilever cancels plan to move headquarters from London to Rotterdam

The result shows a victory for shareholders, and comes three weeks ahead of the planned vote on the proposal.

The climbdown comes three weeks ahead of a vote on the plan and is a significant victory for United Kingdom shareholders big and small who opposed the move, which would have kicked the maker of Dove soap and Ben & Jerry's ice cream out of the benchmark FTSE 100 index.

The company's board on Friday said it still believes that simplifying its dual-headed structure is the best choice for the long term.

Public declarations of opposition to the move were around 12 percent of its London-listed share capital heading into Friday's announcement, almost half of the shares by value needed to vote it down, based on a 100 percent turnout.

Announcing the decision, which will be a major blow for the board, Unilever's chairman Marijn Dekkers, said they will now consider the "next steps".

In a statement, Unilever said: "In developing the proposal, the board was guided by the opportunity to unlock value for our shareholders by creating a stronger, simpler and more competitive Unilever that is better positioned for long-term success".

"The board will now consider its next steps and will continue to engage with our shareholders".

The maker of Dove soap and Ben & Jerry's ice cream made a decision to collapse its Anglo-Dutch structure following a deep business review sparked by last year's failed $143 billion takeover approach by Kraft-Heinz. "We will proceed with the plan to cancel the NV preference shares, further strengthening our corporate governance".

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In March this year Unilever, producer of among other brands, Lipton tea, Dove soap, Axe deodorant and Magnum and Ben and Jerry's ice cream, announced that it meant to change from two legal entities into one single legal entity, incorporated and tax-resident in the Netherlands, with Rotterdam as single headquarters.

For over a century, Unilever has maintained a dual-headed structure, with listings on the London, Amsterdam and NY stock exchanges.

Unilever was formed in 1929 with the merger of UK's Lever Brothers and the Dutch company Margarine Unie. "It was just them telling us what they were doing", said the top-20 shareholder, who had warned Unilever that FTSE inclusion was critical.

However, Unilever - whose brands also include PG Tips and Lipton tea, Persil washing powder and Magnum ice cream - has throughout insisted the move to Rotterdam was "nothing to do with Brexit".

"This change should not really affect the group's near-term operation, although it may lead to a faster pace for CEO succession planning", Liberum analyst Robert Waldschmidt said.

Unions had also come out against Unilever's planned move, arguing that it was vital for the maker of Ben & Jerry's ice cream and other companies to stay in the UK.

Mark Rutte is now putting all his weight into the balance within the coalition government to vote on the removal of the tax on dividends, in order to attract multinationals.

In early trading Friday, Unilever shares were flat at around 4,077p.

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