Unilever backs down in plans to flee UK base

Anglo Dutch foods to personal care conglomerate Unilever has bowed to shareholder pressure and withdrawn plans to axe its UK base.

It planned to switch to the Netherlands to “simplify Unilever’s structure” which it said would bring “clear strategic benefits for shareholders, including even stronger governance and the move to a ‘one share one vote’ principle.”

But major investors railed against the proposal.

Shareholder Royal London Asset Management said it would vote against the move and shareholder advice group Pirc urged all investors to oppose the plans.

Mike Fox, head of sustainable investments at Royal London, said: “We think that Unilever is a high quality company… and have decided to vote against the upcoming resolution.

“Should the motion succeed, we would be forced to sell our holdings in Unilever plc across a number of our funds, something we do not believe would be in the interests of our clients.”

Pirc said: “The affected holders are likely to be some of the longest-held shares – and the board has been short-sighted to presume that they have no voice.”

And two of the biggest trade unions in the UK also came out to support ditching the proposed Dutch relocation.

Unite and GMB called on Unilever to not “flee overseas” from Brexit.

Today, Unilever declared that it had decided to withdraw its proposal.

A statement said: “We have had an extensive period of engagement with shareholders and have received widespread support for the principle behind simplification.

“However, we recognise that the proposal has not received support from a significant group of shareholders and, therefore, consider it appropriate to withdraw.”

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.”

Unilever operates a major production and research and development site at Port Sunlight, Wirral.

It is the centre for Unilever’s home care and personal care research and development, with more than 750 scientists based there.

World famous brands such as Dove, Sunsilk, Rexona, Axe, Domestos, TRESemmé, Comfort, Dirt is Good, Surf and Signal all have Port Sunlight technology inside.

The group has also created a pilot plant at the site that allows it to manufacture prototype shampoos, fabric conditioners, toothpastes, deodorants and laundry liquids.

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “Today’s climbdown from Unilever over a plan which would have necessitated its exit from the FTSE 100 is an example of the power institutional investors can wield when they act in concert with one another.

“Retail investors were likely to have had some sway, too, given the fragmented nature of the shareholder base.

“Notably, of the AJ Bell Youinvest customers with Unilever shares who had so far voted on the deal, 93% voted against the move.

“This brings into question the credibility of Unilever’s insistence that the vast majority of shareholders were ‘fully supportive’ of its proposals ahead of the vote deadline in the UK and the Netherlands later this month.

“Abandoning its dual UK-Dutch stock market listing and moving its HQ to Rotterdam would have made Unilever, one of the London market’s leading lights, ineligible for the FTSE and many institutions complained they would have been forced sellers of the shares.

“The episode looks to have been badly mis-managed and the position of chief executive Paul Polman and the rest of the board is likely to come under severe scrutiny.

“The company now says it is considering its next steps, one option might be to do what fellow Anglo-Dutch firm RELX did in abandoning a dual share structure but keeping the London PLC listing.

“In principle the rationale behind Unilever’s proposals made sense, simplifying the share structure would, for example, have made it easier to use equity in takeover deals. However, whether the current management will be able to push through an alternative is open to question.

“Uprooting to Rotterdam also had clear political sensitivities, given it was timed to take place before the UK’s looming exit from the EU, coincidental or not.

“The news will, therefore, be greeted with relief in Number 10 and some frustration in the Netherlands which had been looking to introduce tax changes to pave the way for Unilever’s move.”