November 28, 2017 / 7:56 AM / a year ago

Anglo-Dutch Unilever favors single home, but delays choice

LONDON (Reuters) - Unilever (ULVR.L) favours creating a single corporate structure, but is delaying a choice between its British and Dutch bases, the consumer goods group said on Tuesday, in part because of the heightened political sensitivity of the decision due to Brexit.

The company logo for Unilever is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 17, 2017. REUTERS/Brendan McDermid

After rebuffing a $143 billion takeover offer from Kraft Heinz (KHC.O), Unilever said in April it would review its dual structure under which it is based and listed in both Britain and the Netherlands, aiming for a decision by the end of the year.

A recent move by the Dutch government to scrap a tax on dividends was seen as an effort to keep the maker of Dove soap and Knorr soup in the Netherlands.

Any decision by Unilever (UNc.AS) to abandon its home on the banks of London’s River Thames would be a blow for Britain as it struggles to negotiate its divorce from the European Union.

“I’m advocating to postpone decisions because it’s a moving playing field - with political turbulence out there. The emotions of the moment are really the issue,” Unilever Chief Executive Paul Polman, a Dutchman, told the Financial Times.

Asked whether he was referring to Brexit, Polman said: “It’s on all sides nowadays - of that you have to be clear. The board is going to take a 30 to 50-year decision. We want to do that well and we want to do that properly.”


Unilever was widely expected to give an update on its review at an investor event starting on Wednesday.

It said on Tuesday the board considered unification with a single share class to be in the best interests of the company and its shareholders.

That would, for example, make it easier for the group both to make acquisitions using equity and spin off businesses.

However, the company said the review was continuing and it did not have a deadline.

If Unilever does unify, it intends to maintain stock market listings in the Netherlands, United Kingdom and United States, continue to apply both the UK and Dutch corporate governance codes and terminate the preference shares of the Dutch entity it recently bought back, it said.

For many shareholders, a simplified structure is more important than its location.

“It’s a big deal for the company, it’s a big deal for the British and Dutch political establishment, but I don’t think it’s a very big deal for the shares,” said Ali Miremadi, who runs global and European equity funds at GAM Investments.

“From an investor point of view, all that matters is efficiency and cost, and if it helps them to be able to dispose of some things they would otherwise struggle to do,” said Miremadi, who has invested about 2.5 percent of the funds he manages in Unilever.

At 0930 GMT, Unilever shares were up 1.4 percent in London and 1.3 percent in Amsterdam.

Unilever is in the midst of an auction to sell its margarine and spreads business, but has said it would spin the business off if the price wasn’t good enough.

The company confirmed on Tuesday its 2017 guidance for underlying sales growth of 3 to 5 percent, an improvement in underlying operating margin of at least 100 basis points and “strong” cash flow delivery.

Reporting by Martinne Geller; Editing by Jason Neely and Mark Potter

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