Key investor brings new hope Unilever will keep its UK base

ONE of the City’s oldest investment firms has joined the rebellion against Unilever’s plot to ditch its UK headquarters.

Amid growing anger at the move, Schroders said the Marmite maker’s plan to base itself solely in the Netherlands would undermine shareholders’ rights.

It comes as furious shareholders threaten to kick out Unilever’s chairman over how he has handled the proposals.

Unilever must get support for its headquarters plot from investors holding 75 per cent of shares listed on the London Stock Exchange. And separately, more than 50 per cent of the individual shareholders who vote must give their support.

Senior City sources say that faith in Unilever’s leadership has been severely shaken because they have proved unwilling to listen to shareholders’ concerns. Both chairman Marijn Dekkers and chief financial officer Graeme Pitkethly could face calls to quit over their handling of the issue.

And Schroders – one of the 20 biggest investors in Unilever in London – has pledged to oppose the plan in a crunch vote later this month. The 214-year-old fund manager owns 0.8 per cent of Unilever’s stock in London.

It is the latest in a string of big firms to warn they will vote against the plan, including Aviva Investors, Lindsell Train, Legal & General and M&G Investments. Doubts about the plan are so great that firms have taken the unusual step of asking for an intervention from the Investor Forum, a powerful group which represents some of the largest players in the Square Mile.

Unilever wants a single legal base in Holland, severing a link with Britain that began in the Victorian era. Since it was created by the merger of British soap maker Lever Brothers and the Dutch firm Unie in 1925, it has had joint legal headquarters in the Netherlands and the UK.

The move only involves Unilever’s legal structures, and no jobs will be affected in the short term. The firm is listed on both the London and Amsterdam stock exchanges. But Unilever – which makes a wide range of products including Magnum ice creams and Lynx deodorant – would be removed from the FTSE 100 index of big UK firms if it ditches its legal base in the UK, because it would no longer be considered British.

That means those who invest in trackers or active funds that only hold shares in FTSE 100 firms would be forced to offload their shares, potentially costing them millions if the move causes prices to fall.

Unilever was badly bruised by a hostile takeover attempt from US rival Kraft Heinz last year. It is harder for such bids to succeed under Dutch law. Jessica Ground, head of stewardship at Schroders, said: ‘We understand the company’s desire for simplification but we do not believe this is the right decision for Unilever plc shareholders.

‘We have previously expressed our concerns about the moves in the Netherlands towards protectionism, which undermines shareholder rights. In addition, our clients will be forced sellers of Unilever plc as a result of it exiting the FTSE UK indices.’

Meanwhile, investors have complained that senior management are unwilling to meet them face to face, instead only being available to talk on the phone. One insider said: ‘The chairman and chief financial officer are struggling long term – they don’t seem to have the right attitude with shareholders.’ Some are also annoyed that much of the explaining has been left to Mr Dekkers and Mr Pitkethly. They launched a charm offensive last week while Unilever’s chief executive, Paul Polman, was in New York for a conference at the United Nations.

A Unilever spokesman said: ‘We have held around 200 meetings with shareholders over the last six months and will continue to engage extensively in the weeks ahead.’

KEEP UNILEVER IN BRITAIN! From the Mail, September 18