What the Unilever decision to stick with its UK headquarters means

By Lucy Whitehouse contact

- Last updated on GMT

What the Unilever decision to stick with its UK headquarters means
Investor opposition has meant that Unilever will be keeping its headquarters in the UK, rather than its previously planned move to the Netherlands. We take a look behind the headlines at why.

The company had previously announced it was planning to simplify its business structure​, a plan in which the current parent company structure of two legal entities (UK and Dutch) was to become one single holding company.

But with the company having now announced it has withdrawn this proposal​, we take a look at why.

Why withdraw the proposal?

Unilever has said that an extensive period of engagement with shareholders received widespread support for the principle behind simplification, but rejection from a ‘significant group’ of shareholders.

Marijn Dekkers, Chairman, said: “Unilever has built a long track record of consistent and competitive performance. The Board continues to believe that simplifying our dual-headed structure would, over time, provide opportunities to further accelerate value creation and serve the best long-term interests of Unilever​.

The Board will now consider its next steps and will continue to engage with our shareholders. We will proceed with the plan to cancel the NV preference shares, further strengthening our corporate governance​.”

Analysis: institutional shareholders rejection

The proposal to merge the company have been rejected by shareholders, and specifically by an influential block of institutional shareholders in the UK.

As the Financial Times writes, the plans “quickly attracted opposition from leading UK institutional shareholders, including Columbia Threadneedle, Legal & General Investment Management, Schroders, Aviva Investors and M&G Investments​.”

Explaining the rejection, the FT report explains​ that “UK shareholders were concerned that once Unilever shifted its domicile to the Netherlands, it would be removed from the FTSE 100 index.”

This would have forced funds that track the FTSE 100, as well as many active funds, to sell their Unilever stock. Shareholders had complained they would have to do this without the premium that would normally be generated in a takeover and with potential tax costs​.”

This being the major problem with Unilever’s planned simplification was also picked up in The Guardian, by its financial editor Nils Pratley.

The near-certainty that the consumer goods giant, currently Anglo-Dutch, would be ejected from the FTSE 100 and FTSE All-share is one of the highly contentious elements of the plan​,” he explained in a recent piece​.

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