UNILEVER: £100M BACKLASH BEGINS
Top investors line up to fight plot to move iconic firm to Netherlands
UNILEVER’S bid to ditch its UK headquarters faced a fullblown crisis last night.
Savings giant M&G Investments said it will oppose the firm’s proposal for a single legal base in the Netherlands.
Aviva Investors, Columbia Threadneedle and Lindsell Train – Unilever’s third largest shareholder in London – have already warned against the change.
It was also feared the move could land British investors with a £100million foreign tax grab.
Last night NFU Mutual became the first minor shareholder to break cover and oppose the proposal.
Unilever – the maker of household favourites like Marmite and Persil – wants to sever its links to Britain which have endured since Victorian times.
The change needs the backing of 75 per cent of investors who own shares through the London Stock Exchange at a crunch vote next month.
M&G – which looks after £285.8billion of savers’ cash and sponsors the Chelsea Flower Show – hit out at Unilever’s failure to consult shareholders. Head of corporate finance, Rupert Krefting, said: ‘We do not support Unilever’s proposal to redomicile to the Netherlands as the company has not adequately persuaded UK shareholders.’
It is feared British savers could be stung with a tax grab of more than £100million a year. Overseas investors face a 15 per cent ‘withholding tax’ on dividends under Dutch law.
If the UK office is ditched, British investors will become liable for Dutch taxes. An estimated 43 per cent of Unilever investors through the London Stock Exchange are British, according to Bloomberg, and last year they earned £645million in dividends.
If the tax had applied, they would have lost out to the tune of £97million.
The Dutch government pledged to scrap the tax in 2020 but there are fears it could be kept after all. Unilever claims to have found a way that would allow British investors to carry on getting payouts without paying the tax.
But investors fear the Dutch authorities could close the loophole. NFU Mutual, which is among the top 60 shareholders in Unilever, said it will vote against the plans. A spokesman said: ‘We see no benefit to our investment if the vote is passed.’ Several stock market tracker funds could vote against the plan too. Many of these funds seek to follow the performance of the FTSE 100 index of British firms. Unilever will be kicked out of the FTSE 100 if it closes its UK HQ – meaning these tracker funds will have to sell their stakes.
A Unilever spokesman said: ‘It is anticipated that Dutch withholding tax will be abolished on January 1, 2020.If it is not, shareholders would receive dividend substitution payments free of Dutch withholding tax for a considerable period of time.
‘In addition, the Board would also consider alternative structures or measures to mitigate the impact of Dutch withholding tax.’
KEEP UNILEVER IN BRITAIN!
BRITAIN’S emotional attachment to Unilever could hardly be stronger.
The maker of such domestic staples as Persil washing powder and Dove soap, its Victorian predecessor Lever Brothers was synonymous with far- sighted and benevolent management, building the model village of Port Sunlight on the Wirral for its employees – complete with art gallery, cottage hospital and temperance hotel.
So the news that this now Anglo-Dutch company may be relocating to Rotterdam comes as a profound shock.
But this is not just a sentimental reaction. Many British pension funds and other institutions have large stakes in Unilever and could be seriously out of pocket if the firm dropped out of the FTSE.
Furthermore, there are grave doubts whether the company itself would prosper. There may be some short- term tax advantage and greater protection against aggressive takeover bids but analysts believe its shares could become less attractive in such an obscure backwater.
Major British shareholders are fighting desperately to block the move and the Mail urges ministers to do all they can to help.
They must not simply look the other way while a great British company leaves these shores for ever. ON the same day it’s revealed that 60,000 cases of dementia in the UK every year are caused by air pollution – particularly diesel fumes – comes the shocking allegation that BMW, Volkswagen and Daimler colluded to slow down the development of ‘clean emission devices’ to avoid competing with each other. If this is true, it’s not just a motoring scandal, it’s a sickening crime against the public health.