Unilever Dr (EU:UNA)
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By Saabira Chaudhuri
Unilever PLC on Friday abandoned its plan to ditch its London headquarters in favor of the Netherlands after facing mounting opposition from some of its largest investors.
The maker of Hellmann's mayonnaise and Ben & Jerry's ice cream had planned the move as part of a broader consolidation of its British and Dutch operating companies to make it more nimble.
However, a parade of big institutional investors said they would oppose the plan at a shareholder vote later this month. The move would have cost Unilever its place in the U.K.'s FTSE 100 index, forcing some investors to sell.
The reversal represents a surprise capitulation for departing Chief Executive Paul Polman, who made the consolidation effort his swan song. After fending off an unsolicited bid from American rival Kraft Heinz Co., Mr. Polman and the board embarked on a strategic review that culminated with the plan.
On Friday, Unilever said it would withdraw the proposal after recognizing it hadn't received support from a significant group of shareholders. The company said it still thought simplifying its structure was in its best long-term interests and that it would now consider next steps.
Some analysts suggested the situation could accelerate a change of management at the company, with Unilever having already started a search for Mr. Polman's successor. Société Générale's Sriram Gurijala said the plan was probably the most important item on the Dutch executive's to-do list and that now it was off the table, transition could happen sooner.
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."
"We are pleased with Unilever's decision to halt its proposed plans," said Iain Richards, head of responsible investment at Columbia Threadneedle. "Better approaches are possible and the problems...were foreseeable."
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.
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. The company said at the time that a single structure would give it more flexibility for mergers and acquisitions.
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.
--Adam Clark contributed to this article.
Write to Saabira Chaudhuri at firstname.lastname@example.org
(END) Dow Jones Newswires
October 05, 2018 07:41 ET (11:41 GMT)
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