Oct 5, 2018
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Beauty giant Unilever axes plan to "simplify" company structure

Oct 5, 2018

In a surprise move on Friday, Anglo-Dutch consumer products giant Unilever said it has cancelled plans to move from its current dual-headquartered structure to a Dutch head office and Dutch main stock exchange listing. The announcement came after shareholder opposition to the plan had mounted. 


In a London Stock Exchange statement, the company said: “The Unilever board has today decided to withdraw its proposal to simplify Unilever's dual-headed legal structure. 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.

“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.”

But chairman Marijn Dekkers said the board continues to believe that the move would, over time, have provided “opportunities to further accelerate value creation and serve the best long-term interests of Unilever.” And he added that the board will “now consider its next steps and will continue to engage with our shareholders.”

It may have seemed like a small issue to those who sell and buy its products, which in recent periods have included an ever-ever-expanding array of beauty brands such as Dollar Shave Club, Schmidt’s Naturals, Carver Korea and Hourglass. But the company, which has also been rumoured to be eyeing Space NK, was the subject of a hostile takeover bid last year and promised shareholders that it would work to unlock value for them when they supported it in rebuffing that bid. The Dutch move was big part of that strategy.

And it’s no coincidence that protection against hostile bids is stronger in The Netherlands than it is in the UK (although the company had promised not to take advantage of barriers against takeover bids). Also, with Brexit looming, being ‘inside’ Europe rather than looking on from the outside might have seemed a nicer place to be.

Unilever had stressed throughout that the move from a  dual listing to a single listing would change little for shareholders (it would have retained a London listing but would have exited the elite FTSE 100 index). But shareholders were clearly not convinced.

“This is clearly a win for UK plc but frustrating for Unilever,” said Berenberg analyst James Targett in a note. “It is rather embarrassing for management who had lobbied hard for simplification.”

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