Unilever Drops Plan to Leave London Amid Shareholder Revolt -- 4th Update
05 Oktober 2018 - 1:56PM
Dow Jones News
By Saabira Chaudhuri
Unilever PLC on Friday abandoned its plan to ditch its London
headquarters in favor of the Netherlands after facing mounting
opposition from some of its largest investors.
The maker of Hellmann's mayonnaise and Ben & Jerry's ice
cream had planned the move as part of a broader consolidation of
its British and Dutch operating companies to make it more
nimble.
However, a parade of big institutional investors said they would
oppose the plan at a shareholder vote later this month. The move
would have cost Unilever its place in the U.K.'s FTSE 100 index,
forcing some investors to sell.
The reversal represents a surprise capitulation for departing
Chief Executive Paul Polman, who made the consolidation effort his
swan song. After fending off an unsolicited bid from American rival
Kraft Heinz Co., Mr. Polman and the board embarked on a strategic
review that culminated with the plan.
On Friday, Unilever said it would withdraw the proposal after
recognizing it hadn't received support from a significant group of
shareholders. The company said it still thought simplifying its
structure was in its best long-term interests and that it would now
consider next steps.
Some analysts suggested the situation could accelerate a change
of management at the company, with Unilever having already started
a search for Mr. Polman's successor. Société Générale's Sriram
Gurijala said the plan was probably the most important item on the
Dutch executive's to-do list and that now it was off the table,
transition could happen sooner.
Critics had argued that the plan's benefits weren't clear, that
there was uncertainty about Dutch dividend taxes and that the move
could have set a bad precedent as the U.K. readies to depart the
European Union.
Major investors, including Aviva, M&G, Legal & General,
Schroders, Lindsell Train, Columbia Threadneedle and Royal London
Asset Management -- who together own around 10% of Unilever -- all
said they planned to vote "no."
"We are pleased with Unilever's decision to halt its proposed
plans," said Iain Richards, head of responsible investment at
Columbia Threadneedle. "Better approaches are possible and the
problems...were foreseeable."
The proposal also angered some private shareholders, who stood
to have an outsize role in the vote because of a rule requiring a
"yes" vote from more than 50% of those voting no matter how big
their stake is. That would have given an owner or just one share
the same voice as a major investor.
Unilever had made a big push to win over shareholders in recent
weeks as public opposition mounted.
The company's chairman wrote an op-ed for a major British
newspaper, its finance chief appeared on a high-profile BBC radio
show and the company took out full-page adverts in the mainstream
press.
Unilever has long operated as two separate listed entities --
Unilever PLC in the U.K. and Unilever NV in the Netherlands -- with
a group-wide set of managers and directors.
In March, it said it would unify the dual structure that dates
back to the 1929 merger of Lever Bros., an English soap maker, and
Margarine Unie, a Dutch margarine producer. The company said at the
time that a single structure would give it more flexibility for
mergers and acquisitions.
Unilever picked the Netherlands over the U.K. for its base
because it said the Dutch entity was bigger and that those shares
traded with greater liquidity. It said the move wasn't related to
Brexit.
--Adam Clark contributed to this article.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
October 05, 2018 07:41 ET (11:41 GMT)
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