Unilever talks up its plan to go Dutch in charm offensive
Unilever executives remain confident that shareholders will back a move to base a new single headquarters in the Netherlands as they launched a charm offensive on Tuesday to win over opponents.
The plan by the Anglo-Dutch company to reform a dualheaded structure has become a hot topic in Britain, where it has become entangled in the debate over Brexit.
Two main practical concerns are around the forced selling of Unilever shares by some British investors because Unilever will drop out of the benchmark FTSE 100 index, and the future tax treatment of Dutch dividends.
A month before shareholders vote on the move, four top-20 investors have voiced concern or disapproval. Together, they control about 5.5% of the British entity’s shares, according to Thomson Reuters data.
In a co-ordinated media offensive, chair Marijn Dekkers wrote an opinion piece in the Daily Telegraph, while CFO Graeme Pitkethly talked up the proposal on BBC Radio 4.
Pitkethly said the company believed that its plans would be approved. “We’re still confident. We’ve had very deep engagement with 200-plus investors over six months.”
The company decided to collapse its dual-headed structure following a review sparked by an unsolicited $143bn takeover offer in 2017 from Kraft-Heinz. It says the move will improve governance and make it more agile, particularly when it comes to big-ticket deals.
David Cumming, chief investment officer of equities at Aviva Investors, a top-20 Unilever shareholder, told BBC Radio that it looked like Unilever was moving to the Netherlands for better takeover protection following Kraft’s approach.
“After 90 years with a dual structure, it seems a little bit of a coincidence,” Cumming said. “I think they will struggle, because I don’t see logically why any UK shareholder would support Unilever’s decision to go Dutch.”
Responding to the comment about takeover protection, Pitkethly said “the best form of protectionism is great performance”. He emphasised that the maker of Dove soap and Ben & Jerry’s ice cream was committed to Britain, with over 60% of its business run from London.
Unilever has said that its Dutch future has nothing to do with Brexit. Still, its departure would be a blow for the British government as it struggles to negotiate its divorce from the EU and preserve its place as a business hub.
Given fast changes in how consumers are eating and shopping, Dekkers said Unilever did not have time to wait for Brexit to take shape before making its move. “We don’t have the luxury to just see how politics develop because we have to move on as a company,” he said.
For Unilever’s proposal to pass, it needs approval from 75% of its UK voted shares and 50% of the Dutch. It also needs to be endorsed by a majority of shareholders. If approved at voting scheduled for October 25 and 26, the existing shares would stop trading on December 21, with the new shares beginning to trade on December 24.
Index investors, which have strict mandates, make up about 17% of the combined shareholding, Pitkethly said. Even though Unilever may get sold by FTSE trackers, he pointed out that the new structure will double its representation in the Euro Stoxx 50.