Unilever’s £5bn payoff

MARMITE and Dove soap owner Unilever has promised to hand shareholders £5bn as it faces a backlash over plans to ditch its UK headquarters and base itself in the Netherlands.

The Anglo-Dutch company, whose brands also include Domestos, Persil, Ben & Jerry’s, Lynx and Knorr will start buying the shares back off investors next month.

It follows the sale of the margarines business behind Flora and I Can’t Believe It’s Not Butter to American private equity group KKR last year for £5.9bn.

Analysts said the buyback, which comes alongside an 8pc rise in the dividend to 33.68p a share, would act as a ‘sweetener’ as it attempts to persuade investors of the merits of its decision to make Rotterdam its base instead of London.

The move will see Unilever shares have a secondary listing on the stock market in London, and a full listing in Rotterdam, meaning they are likely to be removed from the FTSE 100 index. Some major investors with funds that track the Footsie fear they will be forced to sell their Unilever holdings at an unfavourable price.

Graham Spooner, an analyst at The Share Centre, said: ‘Unilever is facing mounting investor unrest over its UK exit. There is opposition amongst a group of shareholders whose holding may be directly affected.’

The promise of cash to shareholders came as the company reported a 3.4pc rise in sales for the first quarter of the year. However, turnover fell 5.2pc to £11bn due to currency swings.

The company also revealed that the price of its goods rose by just 0.1pc in the first quarter.

Unilever said: ‘ There is a small group of shareholders whose holding may be directly affected by our proposal and we will continue to engage with them. We remain highly confident of achieving the required level of shareholder support.’