Major shareholders and concerned industry bodies emerged victorious on Friday as Unilever revealed it had abandoned plans to scrap its dual Anglo-Dutch structure and move its headquarters to the Netherlands.
The consumer goods firm said after an extensive consultation period it realised the proposal had not received support from a significant group of shareholders and it was therefore “appropriate to withdraw”.
The proposal, which shareholders were due to vote on later this month, had already drawn sharp criticism from some of the firm’s biggest shareholders, Legal & General Investment Management, Aviva Investors and Nick Train’s boutique firm Lindsell Train, who own a combined 13% of the business.
All three expressed concerns that if Unilever secured the 75% UK shareholder approval required to simplify its business structure they would become “forced sellers”.
Constructive response
Royal London Asset Management’s head of sustainable investments Mike Fox (pictured) said the Anglo-Dutch consumer goods giant had listened to shareholder concerns and responded in a “constructive way”.
Earlier in the week it joined the growing shareholder opposition arguing that many UK shareholders were effectively voting for forced divestment of their holding.
RLAM owns a 0.7% stake in the firm which is spread across some of its largest funds including the £1.2bn UK Growth Trust and £687m UK Equity fund. Fox’s RLAM Sustainable Leaders Trust holds a 4.29% position.
“As a high quality company with a talented management team, we are pleased we and other UK investors can now share in the future growth of the company,” said Fox. “We look forward to continued engagement with Unilever on the next steps.”
Feeling ‘victorious’
Retail stockbroker The Share Centre said it was “feeling victorious” on Friday morning after fighting a “spirited campaign” against Unilever’s plans to prevent nominee shareholders from having a say in its possible relocation.
UK shareholders were due to vote on Unilever’s UK exit later this month. But savers who held shares in the company indirectly through nominee accounts were not allowed to participate, a move which The Share Centre chairman Gavin Oldham panned as “unacceptable”.
Oldham had written to business secretary MP David Clark to get the government to intervene and was prepared to pursue legal action if Unilever did not back down.
But one of the analysts at the broker, Helal Miah, said by rejecting Unilever’s relocation shareholders were potentially losing out on cost savings and leaving the firm more vulnerable to a potential takeover.
“Nonetheless, this is good news for UK investors as many active and tracker funds will now continue to be able to invest in this company offering the diversification they need, there are not too many other companies in the UK offering what Unilever has to offer,” he said.
IA welcomes Unilever’s decision
The Investment Association also welcomed Unilever’s about face.
Before news broke that the FTSE 100 firm was scrapping its plans, the IA expressed concerns about the proposal which many of its members strongly objected to.
The UK trade body’s paid-for independent corporate governance research service (IVIS) issued a “red top” on Unilever’s proposed simplification which it said, “represents our strongest level of concern”.
Unilever is a beloved holding of some of the biggest retail funds in the IA’s universe, including the £5.7bn Lindsell Train UK Equity fund and Hugh Yarrow’s £2.6bn Evenlode Income fund.
| Fund | Unilever holding (%) |
| Lindsell Train UK Equity | 9.70% |
| Stewart Investors Worldwide Leaders | 9.10% |
| Evenlode Income | 8.41% |
| Lindsell Train Global Equity | 7.90% |
| Stewart Investors Global Emerging Markets Sustainability | 7.80% |
| Stewart Investors Worldwide Sustainability | 7.40% |
| Aviva Investors UK Equity | 6.69% |
| Threadneedle Ethical UK Equity | 6.20% |
Source: FE Analytics
“We look forward to engaging with the company on their future plans,” an IA spokesperson said on Friday.
Unilever board still believes simplification is best
Unilever chairman Marijn Dekkers said in a statement on Friday that the board continues to believe that simplifying the company’s dual structure would over time unlock value for shareholders and create a “stronger, simpler and more competitive Unilever”.
“The board will now consider its next steps and will continue to engage with our shareholders,” he said. “We will proceed with the plan to cancel the NV preference shares, further strengthening our corporate governance.”
Shares in the consumer goods giant opened marginally higher on Friday morning at £41.22 per share before settling back down around the previous close.
