Daily Management Review

Major Unilever Shareholder To Oppose Plan Of Shifting Its HQ Out Of UK


09/18/2018




Major Unilever Shareholder To Oppose Plan Of Shifting Its HQ Out Of UK
A plan by Unilever to discard its dual British-Dutch structure would be voted against by a major UK shareholder of the FTSE 100 company.  It is also urging other shareholders to do so.
 
The plan by Unilever to shift its only headquarters in Rotterdam and incorporate as a single company in the Netherlands will be officially opposed by the asset management arm of the insurer Aviva.
 
If this plan is passed in the shareholder voting, it would mean that the company which manufactures a range of consumer goods from Marmite to Dove soap, will no longer be listed in the FTSE 100 index and would force UK tracker funds and those that have strict UK investment mandate only to sell their stakes in the company.
 
 “We are not supportive and we will vote against it. It doesn’t add any value for us, we lose quite a large company from the index and we don’t see any justification for the move. We would encourage other institutional shareholders to do the same as us,” said David Cumming, the chief investment officer for equities at Aviva Investors.
 
“I think they will struggle; I don’t see logically why any UK shareholder would support Unilever’s decision to go Dutch because there is no upside but there is downside – and we lose an excellent company from the index,” said Cumming in a program on BBC Radio 4.
1.4 per cent of Unilever stocks are owned by Aviva Investors.
 
At least 75 per cent of the UK shareholders need to back the proposal of Unilever to get it through along with 50 per cent of Dutch shareholders. This is set to be decided in two votes -one in London on October 26 and the other in Rotterdam on 25 October respectively.
 
In order to push forward and convince its shareholders to agree to its proposal, Unilever has held more than 150 meetings with investors after it had announced the plan.
 
 “We have engaged extensively with our shareholders and we believe the vast majority are fully supportive of the board’s proposal,” Unilever said in the statement.
 
The company would find it easier to sell and buy assets and it would be possible to improve governance by simplifying the company structure, Unilever has argued. The company has said that Amsterdam is home to about 55 per cent of its shareholders and the shares that are listed in Amsterdam exchange are more liquid in nature.
 
If the plans of Unilever go through, it would be a hard blow of the image of London as a financial centre. However, allegations that its proposal and plan are related to Brexit have been denied by Unilever. It has been almost a century now - since it was created in 1929, that this system of dual structure has been prevalent in Unilever. The company was created with the merger of British soap maker Lever Brothers and the Dutch company Margarine Unie.
 
(Source:www.theguardian.com)






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