The board of the consumer goods giant, which owns food brands such as Magnum ice cream, Pot Noodle, Marmite and PG Tips tea, released a statement, which read: “We have had an extensive period of engagement with shareholders and have received widespread support for the principle behind simplification. However, we recognise that the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw.”
Unilever chairman Marijn Dekkers said the board continued to believe that simplifying the company’s structure would, over time speed up value creation and serve its long-term interests. “The board will now consider its next steps and will continue to engage with our shareholders.”
Simplify legal structure
The board claimed the proposal, which was announced in March, to relocate to Rotterdam in the Netherlands was motivated by a desire to simplify a ‘dual-headed’ legal structure and maximise shareholder earnings. However, the business needed 75% of shareholder votes to ratify the decision.
Aviva shareholders, which hold a significant stake in the business, argued that the move would have removed Unilever from Financial Times UK share indices, forcing stakeholders to sell shares at a potentially reduced premium.
Commenting on the latest development, Mirza Baig, global head of governance, Aviva Investors, said:“We are pleased that Unilever has listened to shareholders’ concerns and chosen to withdraw its proposal. We believe its decision to remain headquartered in the UK in addition to the Netherlands is in the best interests of its UK shareholders and UK plc.”
David Cumming, chief investment officer, Aviva Investors, said in September: “Unilever’s decision appears to be a defensive response to recent governance challenges and, consequently, will not create any value for shareholders. Furthermore, a material number of longstanding supportive shareholders will become forced sellers due to the resultant removal of this high-quality company from the FT All Share and FTSE 100 indices.”
Unilever’s restructure would have seen it refocused on three divisions: Beauty & Personal Care, Home Care and Foods & Refreshment, with food and drink brands operating out of the Netherlands.
Clive Black, head of research at Shore Capital, described the proposal as a “body blow to the reputation of London”. Unilever’s UK offices are located on Victoria Embankment in London.