Unilever heeds ‘garage sale’ warn­ing from Myn­ers

The Guardian - - FINANCIAL - Rob Davies

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.

Pho­to­graph: Dan Chung for the Guardian

Unilever re­jected a £115bn bid from Kraft Heinz, trig­ger­ing a share­holder rift

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