Unilever rejects single structure

Double act: The Anglo-Dutch giant, led by Patrick Cescau and Antony Burgmans, likes having two headquarters

THE American revolutionary war motto ‘unite or die’ has clearly passed over the head of Unilever – and its army of advisers. So much so that after an exhaustive three year review of the AngloDutch business, its bosses have decided that there are no discernible benefits to be had from unifying its structure or listing its shares in just one market – not even in the spirit of Christmas togetherness.

In the time it has taken Rothschild, UBS, bankers at HSBC and Unilever’s board to come up with the decision to do nothing, another FTSE Anglo-Dutch giant, Shell, took the opposite view.

It brought together its two holding companies, ending almost a century with a dual structure. It was a brave step by Shell, with the only opposition coming from small shareholders who faced a hefty tax bill after the move.

Yet Unilever – the company behind Dove, Lipton Tea and Hellmann’s mayonnaise – is adamant that there is no compelling advantage in melding together Holland and the UK, whether for shareholders, the company’s operational performance or overall corporate flexibility.

Nor, the company argues, would it save much money by bringing staff at the London and Rotterdam headquarters under one roof for the first time since the 1930s when Margarine Unie of the Netherlands joined the UK’s Lever Brothers.

That is perhaps somewhat surprising given that Shell boss Jeroen van der Veer sits on the Unilever board and was a key figure in the review team.

Antony Burgmans, who stepped up as Unilever’s first group chairman after the dual board structure was scrapped earlier this year and whose key role was the review, will probably step down next year now that his work is done.

Quite what he has achieved is questionable.

Investors and analysts had been holding out for some drastic action from the board to counter the past few shaky years.

After yesterday’s damp squib they gave Burgmans and the rest a firm thumbs down. The shares fell 10p to 5721⁄

Even some minor changes to be brought in – to make it easier to move assets across the company and equalising the Amsterdam and London share values so that one Dutch share is worth one UK share – were dismissed as a ‘ lot of effort for little return’ by analysts at Panmure.

For his part John Studzinski, the veteran HSBC investment banker who advised Unilever, called it the most exhaustive review he has ever seen in the City.

If it generates anything like the Shell review fees for advisers – at $ 115m ( £ 65m) – there will be at least one clear beneficiary.

What is more, the review has done nothing to tackle Unilever’s weak sales in Europe, or tricky market in India and Europe where it is trying to claw back market share lost to its much larger rival Proctor & Gamble.

But Patrick Cescau, Unilever’s chief executive charged with that task, said yesterday he has enough ammunition to do the job. He claims that the move to a single chief executive and chairman, taken at an earlier stage of the review, was a more significant step than simplifying the legal structure of the business or listing all the shares in London would have been.

So far though there has been little sign of any operational upturn. Net profit was down 11pc to £675m in the three months to the end of September, excluding extraordinary profits from the sale of its cosmetics business.

Furthermore, Unilever has been forced to cut prices to retain customers at a time when raw material and energy costs are rising.

Cescau has been working to streamline the business after Unilever’s five-year plan for growth by shedding brands and reducing costs failed.

Critics say the group has been too slow to adapt to consumer fads. The same could be said of the board.

In today’s climate, investors favour greater transparency and simplicity, but neither appear to have been delivered by yesterday’s announcement.

In Unilever’s case, shunning unity might not lead to its death, but in the competitive corporate world, inertia can be just as bad.