Unilever scraps plan to leave London headquarters

Consumer giant Unilever will stay in the UK for now after bowing to shareholder pressure

Consumer giant Unilever will stay in the UK for now after bowing to shareholder pressure

Unilever, the British-Dutch consumer goods giant, has scrapped a plan to "simplify" its corporate structure after pressure from investors who would have been forced sellers of UK-listed shares.

Announcing the decision, which will be a major blow for the board, Unilever's chairman Marijn Dekkers, said they will now consider the "next steps".

Unilever chose to collapse its Anglo-Dutch structure following a deep business review sparked by last year's failed $143 billion takeover approach by Kraft-Heinz.

Waldschmidt said the bigger drivers for Unilever's shares were USA interest rates and continued difficulties in emerging markets, particularly related to their currencies.

But Unilever had in recent weeks faced mounting opposition from key shareholders, including Aviva Investors, Royal London, Columbia Threadneedle, Legal & General Investment Management, Lindsell Train, M&G Investments and Brewin Dolphin. The withdrawal means that for now, Britain gets to keep one of its most valuable companies as it moves closer to Brexit.

The company said that it had "had an extensive period of engagement with shareholders", and while it had received support for the principle behind simplification, it recognised that the proposal "had not received support from a significant group of shareholders".

"For some of the British shareholders, the political debate that erupted in the Netherlands over the government's plan to scrap the dividend tax was a factor in them not supporting the proposal by the board" to move Unilever's HQ, Polman told NOS public television.

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"The board will now consider its next steps and will continue to engage with our shareholders".

Unilever plc shares are listed in London and NY, while Unilever NV (currently based in Rotterdam) has shares listed in Amsterdam and NY.

Earlier this week, influential proxy advisory firm PIRC recommended shareholders vote against the move. Sacha Sadan, director of corporate governance at LGIM, said Unilever was understood to have looked at several alternatives before reaching its final decision, but LGIM did not believe it had made a compelling case for shareholders to support Dutch incorporation.

Friday's announcement will come as a slap to Dutch Prime Minister Mark Rutte, whose government has been angling for post-Brexit business from Britain.

Robert Waldschmidt, head of consumer equity research at Liberum, said that the company had "clearly mishandled" the process and misread the response from its United Kingdom shareholders, although the decision not to move forward with the plan did not "materially affect the business" hence the lack of large movements in the shares.

Unilever is also home to well-known products like Knorr soup, Magnum ice cream and Dove beauty products.

Rutte faces opposition to a plan to scrap a dividend tax in a bid to attract global firms and cash in on Britain's departure from the EU. The company's United Kingdom -listed shares fell as much as 1% early Friday.

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