UNA Unilever PLC

By Adam Clark 

LONDON -- Unilever PLC on Friday abandoned its plan to consolidate its British and Dutch operating companies after facing mounting opposition from some of its largest investors.

Under the plan, the maker of Hellmann's mayonnaise and Ben & Jerry's ice cream would have ended its dual-listed structure and ditched its London headquarters in favor of Rotterdam.

The reversal represents a surprise capitulation for departing Chief Executive Paul Polman, who made the consolidation effort his swan song at Unilever. After fending off an unsolicited bid from American rival Kraft Heinz Co., Mr. Polman and the board embarked on a strategic review that concluded a single structure would make it more nimble.

However, in recent weeks a parade of big, institutional investors publicly said they would oppose the plan at a shareholder vote later this month, raising questions as to whether Unilever could muster enough support.

On Friday, Unilever said it would withdraw the proposal after recognizing it hadn't received support from a significant group of shareholders.

The company had said that being a single entity would make it easier to do deals and act quickly. But the move would have cost the company its place in the U.K.'s FTSE 100, forcing some funds that have specific mandates to sell.

Critics had argued that the plan's benefits weren't clear, that there was uncertainty about Dutch dividend taxes and that the move could have set a bad precedent as the U.K. readies to depart the European Union.

Major investors, including Aviva, M&G, Legal & General, Schroders, Lindsell Train, Columbia Threadneedle and Royal London Asset Management -- who together own around 10% of Unilever -- all said they planned to vote "no."

The proposal also angered some private shareholders, who stood to have an outsize role in the vote because of a rule requiring a "yes" vote from more than 50% of those voting no matter how big their stake is. That would have given an owner or just one share the same voice as a major investor.

Unilever had made a big push to win over shareholders in recent weeks as public opposition mounted.

The company's chairman wrote an op-ed for a major British newspaper, its finance chief appeared on a high-profile BBC radio show and the company took out full-page adverts in the mainstream press.

On Friday, the company said it still thought that simplifying its structure would be best in the long term and that it would now consider next steps and engage with shareholders. It also said it would proceed with its plan to cancel its Dutch preference shares.

Unilever has long operated as two separate listed entities -- Unilever PLC in the U.K. and Unilever NV in the Netherlands -- with a group-wide set of managers and directors.

In March, it said it would unify the dual structure that dates back to the 1929 merger of Lever Bros., an English soap maker, and Margarine Unie, a Dutch margarine producer.

Unilever picked the Netherlands over the U.K. for its base because it said the Dutch entity was bigger and that those shares traded with greater liquidity. It said the move wasn't related to Brexit.

--Saabira Chaudhuri contributed to this article.

(END) Dow Jones Newswires

October 05, 2018 03:45 ET (07:45 GMT)

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