Unilever drops plan to leave London for single HQs in Rotterdam

Lloyd Doyle
October 8, 2018

The British-Dutch consumer goods group which produces brands such as Persil, Marmite and Sure, had proposed to move its headquarters to Rotterdam as part of a restructuring plan.

It's also seen as a victory for United Kingdom shareholders, who had spoken out against the move, which would have kicked the company out of the benchmark FTSE 100 index.

Unilever's share price has slipped marginally into the red in London this morning, and as of 08:37 BST, was 0.29 percent down at 4,066.00 points.

Unilever announced in a statement this morning that its board had chose to withdraw its proposal to simplify the group's dual-headed structure. "Now the company can put its focus into the core job - driving long-term shareholder value".

"We recognize that the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw", the company said in a statement.

The decision is set to trigger political fallout for Dutch Prime Minister Mark Rutte over his unpopular proposal to scrap a withholding tax on dividends that was seen as helping to woo Unilever.

The Financial Times meanwhile quoted Berenberg analyst James Targett as saying in a note that this was "clearly a win for United Kingdom plc but frustrating for Unilever".

Investors had criticised the decision abandon the UK-Dutch stock market listing, saying that a single Rotterdam HQ could force UK shareholders to sell their shares.

Chairman Marijn Dekkers left the door open for a move in the future, insisting on Friday that the board continued to believe simplifying Unilever's structure remains in the firm's best interests.

The decision followed a failed hostile bid by USA rival Kraft Heinz previous year, which analysts said played a key role in Unilever's decision as the Netherlands has stronger rules to protect companies against takeovers.

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.

Earlier this week Royal London Asset Management joined a chorus of investors in opposing the relocation proposal.

Far right leader Geert Wilders said Rutte should resign over the Unilever debacle - calling him a "leader in decay" - and said there should be a vote of no-confidence in the government.

Another service, IVIS, which is the corporate governance research service of the Investment Association, issued a "red top" recommendation on the move on Friday, its strongest level of concern.

Unilever's Anglo-Dutch structure dates back to 1929 when British soap maker Lever Brothers combined with Dutch margarine company Margarine Unie.

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

"They were overly focused on the benefits to everyone, as opposed to the concerns of United Kingdom shareholders", said Liberum analyst Robert Waldschmidt.

"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.

Unilever was advised by its corporate brokers, UBS and Deutsche Bank, and its legal adviser, Linklaters.

Other reports by Iphone Fresh

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