Unilever heeds ‘garage sale’ warning from Myners
Unilever is drawing up plans to heal a rift among shareholders triggered by its rejection of a $143bn (£115bn) bid from Kraft Heinz, amid a warning that Britain could become home to “a garage sale” unless there is protection for domestic companies from foreign takeovers.
The owner of Dove soap and Ben & Jerry’s ice cream is set to announce results of a review aimed at improving investor returns, with the sale of its spreads business and a one-off special dividend among the options being considered. But the company also remains committed to fending off any renewal of Kraft Heinz’s interest, which comes amid support from the former City minister Paul Myners.
Lord Myners, who chaired Marks & Spencer when it fought off a bid from the BHS tycoon Sir Philip Green, upbraided the prime minister for not doing enough to “protect prize assets” in an editorial for the Sunday Telegraph. Myners warned that major British companies could become the subject of a “garage sale” unless the government took steps to prevent it.
Unilever’s chief executive, Paul Polman, has supported changes to the takeover code governing corporate deals to make it easier to protect a “national champion” such as Unilever.
Richard Buxton, chief executive of Old Mutual Global Investors, lent support to Polman in a letter to the Sunday Times, urging him not to “succumb to the pressures of short-termism”.
But Polman is also understood to be aware that he must also appease a sizeable faction of shareholders who disagree with Buxton – who does not own Unilever shares – and want to see radical plans to boost their returns.
One option is the sale of the group’s underperforming spreads business, which includes brands such as Flora and Stork. Private equity groups such as CVC and Bain Capital are weighing up plans for a £6bn bid for the division, according to reports, while Kraft Heinz could also target the business as a less ambitious alternative to its bid for the entire company.
The company is also pondering raising $15bn to fund medium-sized acquisitions and a sizeable special dividend or buyback to pacify more fractious investors.
A combination of these measures is thought to be the company’s preferred strategy to protect its independence while allaying the concerns of shareholders who wanted Unilever to consider Kraft’s bid.
A survey by the investment house Bernstein suggested half of investors believe the company should have held talks with the US company.
Unilever rejected a £115bn bid from Kraft Heinz, triggering a shareholder rift