Unilever U-turns to unify as UK company
Unilever plans to unify its legal structure as a UK Plc to become a simpler company in a move that reverses a failed attempt to consolidate in the Netherlands two years ago.
The Anglo-Dutch company will make the change through a cross-border merger between Unilever Plc and Unilever NV. Shareholders of the Dutch NV company will receive one Plc share for each of their shares.
The FTSE 100 consumer goods maker said there would be no change to operations or staffing levels in the UK or the Netherlands or the manufacture or supply of products after the unification. Its shares fell 0.7% to £43.46 in London at 14:15 BST.
The plan marks a U-turn by the company after a UK shareholder rebellion forced it to abandon an attempt to unify its structure in Netherlands in 2018. That plan was seen partly as a move to protect itself from hostile takeovers under tougher Dutch merger laws. Unilever found itself caught up in controversy over Brexit and scrapped the idea.
Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: "Unilever’s plans to list as a single entity on the London Stock Exchange come as a surprise. It’s a big departure from the failed plans of 2018. Unilever is a giant in fast-moving consumer goods and times are changing. Any move that contributes to Unilever becoming a more agile machine is a step in the right direction."
Unification as a Plc will strengthen the company's corporate governance by giving all shareholders an equal voting basis while keeping listings in London, Amsterdam and New York, Unilever said. The change will also make it easier for the conglomerate to make equity-based acquisitions and disposals.
The maker of Ben and Jerry's ice cream, Dove soap and Persil washing powder is considering offloading various businesses including its tea business, which produces PG Tips. Unilever said a single company structure would give it more flexibility when disposing of businesses - including demergers.
The company said having more options for acquisitions and sales was even more important in the turbulent business environment created by the Covid-19 crisis, which has changed consumer behaviour and caused an economic shock. Unilever's two-country arrangement is the result of a merger between a Dutch margarine company and the UK's Lever Brothers 91 years ago.
Nils Andersen, Unilever's chairman, said: "Unilever's board believes that unifying the company's legal structure will create greater strategic flexibility, remove complexity and further improve governance. We remain committed to The Netherlands and the UK and there will be no change to Unilever's footprint in either country."
Unilever said it had spoken to the Dutch government before announcing its plans and has assured it that the foods and refreshment business, which makes up about 40% of income, and a new €85m research centre would stay in the Netherlands.
Lund-Yates said Unilever would now have to convince Dutch shareholders that they should accept a mirror image of the structural overhaul rejected by UK investors.
"The London Stock Exchange is a more liquid environment, so on paper the move makes sense, but any challenge to the unification efforts will likely be more about sentiment than the numbers themselves," she said.