Unilever backs down on Dutch headquarters move after British investor revolt

Mae Love
October 8, 2018

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.

A spokesman for Unilever said: "In developing the proposal, the board was guided by the opportunity to unlock value for our shareholders by creating a stronger, simpler and more competitive Unilever that is better positioned for long-term success". He added that shares in the consumer goods giant could benefit in the short term from ending uncertainty around the vote and removing the overhang from forced selling by United Kingdom shareholders had Unilever exited the FTSE.

Small retail investors added to the momentum opposing the move - an ill-communicated reaction following a surprise $143 billion (109.13 billion pounds) bid from Kraft-Heinz KHC.O previous year.

The move follows major opposition from United Kingdom shareholders to the plans, which would have seen the company lose its spot in the benchmark FTSE 100 index.

Unilever has always insisted that the move to focus on Rotterdam was not "to do with Brexit'".

Their main practical concerns were around the forced selling of their shares with no premium, uncertainty around the future tax treatment of Dutch dividends and a perception that the move was in part aimed at securing the greater takeover protections under Dutch law.

The company, which has head offices in both Rotterdam and London, says in a statement Friday that the plan to make Rotterdam its sole headquarters "has not received support from a significant group of shareholders".

Commenting on Unilever leaving the United Kingdom, the leading strategist said: "I don't think Unilever would have made such a big difference".

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The company's board on Friday said it still believes that simplifying its dual-headed structure is the best choice for the long term.

'The board will now consider its next steps and will continue to engage with our shareholders.

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

'We will proceed with the plan to cancel the NV preference shares, further strengthening our corporate governance'.

The group was founded in 1930 after the Dutch company Margarine Unie merged with the manufacturer of know british lever Brothers.

It also said at the time that its 7,300 workers in the United Kingdom and 3,100 in the Netherlands would be unaffected by the changes.

Unilever's announcement also comes as a blow to Dutch Prime Minister Mark Rutte, whose government has been angling for post-Brexit business from Britain.

Unilever is a well known brand, with products such as Marmite, Ben & Jerry's, Lipton tea, Pot Noodles, Hellmans' and even Vaseline. Shares were up around 1 per cent at 4,116p in early morning trade.

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